Updated on: 2026-02-10 As of: 2026-02-10 Latest price: Rs 950 (NSE) as of 2026-02-10 Market cap: Rs 85,000 crore Latest earnings period: FY26 Q2 / TTM Key sources: https://infra.economictimes.indiatimes.com/news/railways/indian-railways-sees-e-ticketing-surge-to-89-in-fy26/125458092; https://www.alphaspread.com/security/nse/irctc/investor-relations/earnings-call/q2-2026

Event: Indian Railways reported e-ticketing penetration at 89% of reserved bookings in FY26, up from 86% in FY25, with IRCTC handling 89.24% of online tickets per Q2 FY26 earnings call. Date: Early February 2026 (FY26 data shared recently) Why the Market Reacted: Investors view high e-ticketing share as validation of IRCTC's digital monopoly, potentially supporting margin stability despite modest 4% YoY ticketing revenue growth. Why This Is Not Just News: While 89% penetration sounds impressive, it masks stagnating revenue growth tied to railway volumes and commissions; deeper analysis tests if margins hold under fare caps or if new payment aggregator ventures dilute focus.

IRCTC's premium valuation hinges on sustained 35%+ EBITDA margins from ticketing monopoly, but falters if railway passenger growth slows, catering contracts erode under competitive bidding, or government imposes fare/commission caps.

IRCTC generates revenue through four segments tied to Indian Railways: Internet Ticketing (40-45% of revenue, 85% EBITDA margin), Catering (30-35%, lower margins due to e-auctions), Tourism (10-15%, volatile), and Rail Neer packaged water (5-10%, steady but low-margin). Ticketing dominates profits as IRCTC holds exclusive rights for online reserved bookings, earning ~Rs 20-30 per ticket commission set by Railways via MoU, with volumes driven by 12+ crore daily passengers but capped by capacity constraints. Catering involves managing 1,000+ e-catering units and onboard pantries under cluster contracts renewed via GEM portal auctions, exposing margins to bidder competition from local players. Tourism packages leverage rail connectivity but compete with MakeMyTrip; Rail Neer benefits from captive train sales. Overall, 90%+ profits flow from ticketing, making IRCTC a leveraged play on railway traffic. However, as a Mini Ratna PSU with 62.4% government stake, pricing power is absent—commissions/fares need Railway Board approval. Recent RBI nod for payment aggregator status aims to monetize 14.63 crore app downloads via merchant fees (1-2%), but requires Rs 100-200 crore capex and faces UPI dominance. Unless passenger volumes grow 8-10% CAGR (tied to Vande Bharat expansion), revenue stays muted at 7-10% YoY, pressuring ROCE above 100% today.

Revenue growth slowed to 7.7% YoY in Q2 FY26, with ticketing at 4% despite 89% penetration, signaling volume dependency over market share gains. EBITDA margins held at 35.25% via cost controls, but ticketing's 85% margin masks catering pressures from e-auctions. ROCE remains elite at 110%+ due to asset-light model (Rs 1,000 Cr cash hoard), but flattens if capex for payments/tourism rises without returns.

Market fixates on IRCTC's 'monopoly' and 85% ticketing margins, overlooking that commissions are fixed by Railways (Rs 20-30/ticket unchanged since FY22) and volumes grew <5% in FY25 amid capacity limits. Investors assume endless digital upside, but 89% penetration leaves little headroom—growth now ties to Railways adding trains, not IRCTC execution. Catering (30% revenue) faces thesis-breaking risk from GEM-mandated e-bidding; loss of 10-15% contracts could shave 200-300 bps off group margins, as seen in FY23 pilots. RBI payment aggregator pivot sounds accretive but ignores execution pitfalls: UPI's 90% share erodes aggregator fees to 0.5%, and SEBI's T+0 settlement mandates demand Rs 500 Cr liquidity. Vande Bharat premium trains boost tourism but enable dynamic pricing bypassing IRCTC if Railways launches direct apps. Govt's 62% stake caps dividends at 30% payout despite Rs 1,200 Cr FY26 cash flow, funding capex elsewhere. Non-consensus: IRCTC trades as growth stock (40x FY27 EPS) despite 7% CAGR revenue; downside if FY26 passenger growth dips below 6% from economic slowdown.

At 45x TTM earnings, valuation prices 15% revenue CAGR and 37% margins through FY28, leaving no room for Q3 FY26 slowdowns. Peers like Makemytrip trade at 25x on faster growth; IRCTC's premium assumes perpetual monopoly, but erodes if ticketing volumes stagnate at 1.2 Bn tickets/year.

Base case (50%) assumes 6-8% passenger growth and stable contracts, delivering flat returns from current levels. Bull requires payment aggregator adding Rs 200 Cr revenue by FY28 and Vande Bharat doubling premiums (low probability sans policy push). Bear (30%) triggers on fare freeze or 20% catering loss, halving EPS.

• Passenger volumes <5% YoY growth for 2 quarters (track Railways monthly data); invalidates ticketing thesis as 89% penetration maxes revenue without volume.
• Railway Board caps commissions below Rs 25/ticket or mandates UPI direct integration (SEBI/RBI compliant), slashing 85% margins to 60%.
• Catering contract losses >15% via GEM auctions, plus Rs 300 Cr balance sheet hit from failed tourism capex.

IRCTC merits margin premium over travel tech peers but not growth multiple, as volumes are railway-captive vs peers' OTA expansion; discount warranted if catering erodes.

• Q3 FY26 ticketing volumes vs FY25 (must exceed 1.25 Bn for growth thesis).
• Management guidance on payment aggregator GMV traction and capex (watch for delays).
• Railway Budget announcements on fare hikes or direct booking apps (March 2026 trigger).

IRCTC offers a high-margin tollbooth on India's rail travel, but its Rs 85,000 Cr valuation embeds flawless execution amid railway dependency. Ticketing sustains 35% EBITDA unless volumes stall or commissions freeze, while catering auctions and payment diversification introduce uncertainty. Downside skews higher if FY26 growth dips below 7%, potentially re-rating to 25x peers. Investors should track passenger data monthly and Q4 contract renewals; thesis holds only if Railways prioritizes capacity over controls. Absent 10%+ volume CAGR, returns lag benchmarks—patience required for PSU realities.