1. Internet Ticketing:
1. IRCTC is the only company authorized by Indian railways to offer online railway tickets through our website and mobile application.
2. Since 2002, there is a huge growth in online ticketing and the ticket booking on IRCTC has grown at a CAGR of 53.81% in the past 18 years. That’s phenomenal growth.
3. In FY19-20, the average ticket booking on IRCTC stood at 8.25 lakh tickets per day.
2. Packaged Drinking Water:
1. IRCTC has its own brand of water with the name Rail Neer that supplies water within trains and stations of Indian railway network.
2. Since 2003, the packaged drinking segment of IRCTC has grown at a CAGR of 22.15%.
3. Travel & Tourism:
1. IRCTC is one of the leading travel and tourism company of India and its services includes domestic rail tour packages, holiday packages, luxury travel in trains like Maharaja express, Golden Chariot, etc, and outbound tours packages to various destinations around the world. 
2. IRCTC also offers domestic and international airline ticketing and hotel booking facility. During the year 19-20, more than 13,630 tourists have availed the rail tour packages of IRCTC against a total of 9,606 tourists in the previous year. 
3. In FY 2019- 20, a total of 58,337 passengers availed IRCTC land packages against 33,725 passengers in the previous year. During FY 2019- 20, an average of 5688 air tickets were booked, per day, through IRCTC air ticket website as compared to 4,676 air tickets in FY 2018-19, registering a growth of approx 20%.
4. Catering:
1. IRCTC is the largest hospitality and catering company in India offering services in passenger trains and railway station premises. It includes:
1. Mobile catering via pantry cars in various trains and train side vending contracts for passengers in train without pantry.
2. It also offers a number of value- added services to passengers in the form of executive lounges, retiring rooms and budget hotels at major railway stations across the country.
3. Next sub-segment in catering includes static catering where IRCTC has established Food Plazas/ Fast Food Units, Refreshment Rooms & Base Kitchens at railway stations.
4. Final sub-segment is E-catering where IRCTC has partnered with various restaurants and food outlets and railways passengers can directly order food via mobile app which is directly delivered to the passenger’s seat. As of FY19-20, there was an average daily meal booking of 21,571 meals in the e-catering segment. In FY 18-19, this number was 11,858 meals per day. So there is 82% growth in e-catering segment.

Overall, on the company and its management, I would rate IRCTC 10 on 10.

Competitive Strength & Weakness: 

Before we discuss the competitive strength and weakness, lets understand why this is important:

• IRCTC is the only Company authorized to sell railway tickets online.
• IRCTC is the only company to distribute packaged drinking water across all stations as well as trains in India. The Company has also installed Water Vending Machines for selling mineral water at lower prices.
• IRCTC is the only authorized entity to provide catering services in trains.
• IRCTC has a strong presence in the Travel and Tourism industry with special trains running for domestic and international travellers, showcasing India’s rich cultural heritage. The company has also tied up with private entities to position itself as a one stop solution for customers in the tourism and hospitality industry.

• Dependency on policies of railway of ministry: The Company’s business and its revenues are substantially dependent on the policies of the Ministry of Railways and operations of Indian Railways. Any policy change or any adverse decision may affect the revenue of the Company for e.g. in 2016 the decision to scrap service fee affected the Company’s revenue.

• Competition Risk: If GOI or the Ministry of Railways opens up the market for private players then the Company can lose its market monopoly. Intense competition may have an adverse impact on the Company’s operation and profitability.
• Cybersecurity risk: With rising internet usage and online business, secured transactions over the internet are essential for the Company’s business operations. Hacking of customer data or cyber threats can result in massive loss of revenue and hurt the Company’s brand image significantly.

Future Growth Prospects

 As an investor, you would want to know if the share price will give high returns in the future or not. Now this would essentially depend upon the growth prospects of the company in the future. How are the growth prospects of IRCTC? Let’s have a look:

• Over the past few years, the Indian booking industry has been growing on account of increasing domestic and inbound tourism. With growing internet penetration and the emergence of Artificial Intelligence (AI), the online travel industry in India is gaining traction. A large number of people are now turning to web portals and mobile apps for better travel deals.
• Total railway booking in FY 2019-20 was 73-75% as compared to 70% in FY18-19 and is anticipated to reach 81-83%, with 425-435 Million tickets estimated to be booked online by FY 2023-24 The online booking market is estimated to reach Rs 2380-2850 Billion by FY 2023-24 growing at a CAGR of 16%-17% from FY19-24. Factors such as rising internet penetration, availability of low cost data, affordable smartphones, increasing usage of debit/credit card and other payment channels will augment growth in this segment.

• Packaged drinking water is anticipated to be valued at more than Rs 400 Billion by 2023, growing at a CAGR of ~20.75% between 2018 and 2023. Increasing awareness about the importance of safe drinking water to maintain good health along with rise in per capita income is creating a demand for bottled water in India. 
• Average daily requirement of Packaged Drinking Water on Indian Railways is approx 18 Lakhs bottles/day. IRCTC’s production capacity is 14.08 Lakhs bottles/day. IRCTC plans to extend its Rail Neer segment further with the commissioning of 5 more plants, expected to be operational by 2020-21. 
• The Company is also contemplating 4 new Rail Neer plants, anticipated to be set up in the near future. Ministry of Railways has directed IRCTC to provide purified, chilled and potable drinking water to railway passengers at an affordable rate (@ H 5/- per 1 litre) through Water Vending Machines (WVMs), thereby reducing pollution on account of lesser consumption of plastic bottles.

• With globalization and overall development of the country in terms of infrastructure and tourism facilities, foreign tourist arrivals to India has tripled from 3 Million per year in 2003 to around 11 Million in 2018 and analysts expect to see more than 30 Million tourists in India annually, by 2028. 
• At the same time, domestic tourism to all states and Union Territories have improved India’s rapidly growing tourism sector. 
• IRCTC is aggressively promoting its rail based tourism products along with multiple other services in its travel and tourism segment. Realising the potential of event management as a business segment, IRCTC plans to position itself as a full-fledged event management company and offer its event management services for organising various events.
• The Company has recently launched international cruise packages along with domestic packages for river cruises to appeal to a large customer base. It is also constantly upgrading and introducing new service offerings to design solutions aimed at capturing a larger market. Meetings, Incentive tours, Conferences and Expositions – MICE) for Ministry of Railways, its PSUs and other government organizations across the country. 

• The Indian food industry was valued at Rs 4.24 trillion in FY 2018-19, registering a CAGR of 11% from 2016-2019. The organized sector, with a share of 35% of the market share, is estimated to grow at a CAGR of 15% from 2019-23 to reach Rs 2.28 Trillion in FY 2-22-23. The growth would primarily be driven by urbanization, rising income level, internet penetration and various choices of cuisines in India.
• With a growing number of passengers on long journey routes, the demand for catering services in railways is also expected to grow. The rail catering industry is expected to be valued at H 14.5-15 Billion by FY 2023-24, growing at a CAGR of 7.5-8.5% from FY 2019-24.To cater to the growing demand, IRCTC is planning to cover nearly 100 sections over the Indian Railway network by TSV (Train Side Vendors) arrangements and commission approximately 50 additional Food Plazas (FPs)/Fast Food Units (FFUs).

Financials

Over the past 5 years, IRCTC revenues are growing at a CAGR of 17% and profits are growing at a CAGR of 32%. That’s fantastic growth!

2. Profitability Ratio: 

Operating margins have been great. ROE and ROCE have been fantastic!

Overall, looking at the profitability, I would rate IRCTC 10/10.

Since the company is debt-free, I would rate it 10 on 10.

4) Management efficiency ratio: 

IRCTC is currently trading at 1500 and the PE ratio is 75 which is above its median PE of 52. Overall, looking at the valuations, I think IRCTC is slightly overpriced. As the COVID situation is not yet over, there is a potential risk of revenue loss in the next few quarters. Overall, on valuations, I would rate IRCTC 5/10.