Fare hike to boost IRCTC’s topline and profitability ahead

Indian Railways Catering and Tourism Corporation (IRCTC) share price rose in early trade after ministry of railways marginally raised basic passenger fare for various classes of Indian Railways with effect from today.

The fare hike is likely to bring in another Rs 2,300 crore revenue for the national transporter.

The fare for second class ordinary, sleeper class ordinary and first class ordinary tickets have been increased by 1 paisa per passenger kilometre.

For second class, sleeper class or first class tickets in non-AC mail or express trains, fare has been increased by 2 paise per passenger kilometre.

Ticket prices for AC chair car, AC 3-tier/3E, AC 2-tier and AC First Class/EC/EA will increase by 4 paise per passenger kilometer.

This includes premium trains such as Rajdhani, Shatabdi and Duronto.

Fares for suburban (single journey fare) and season tickets (suburban and non-suburban) have been kept unchanged.

Recently, the Railway Ministry revised tariff of standard meals on static units in railway stations.

According to the notification, the breakfast will cost Rs 140 and Rs 105 in AC first and AC second, AC third of Rajdhani, Shatabdi and Duronto trains, respectively.

Lunch and dinner will cost Rs 245 in AC first and Rs 185 in AC second and third AC of Rajdhani, Shatabdi and Duronto trains.

For evening tea, passengers will have to shell out Rs 140 in AC first and Rs 90 in AC second and third of Rajdhani, Shatabdi and Duronto trains.

Passengers travelling in sleeper class of Duronto trains will have to pay Rs 65 for breakfast, Rs 120 for lunch/dinner and Rs 50 for evening tea.

The Indian Railway firm made its market debut on October 14 with IRCTC share listing at Rs 644 on BSE and Rs 626 on NSE against the issue price of Rs 320.

The government sold 12.6% stake of the firm which is engaged in internet ticketing, catering, packaged drinking water and travel and tourism.

The expectations of Indian Railways offering private players the opportunity to run 150 modern trains based on a revenue-sharing model, is also keeping investors interested.

Net net we believe that irctc which enjoys a very strong business moat and a monopoly will continue to enjoy strong top line and bottom line growth over the medium term

Additionally other positives for irctc is that it continues to be debt free has minimal working capital requirements and demand is assured and is essentially a b2c play which is why we believe it will always enjoy premium valuations ahead also.

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