IRCTC shares to turn ex-dividend on Aug 18, to pay 75% dividend

Indian Railways catering services provider, IRCTC will turn ex-dividend on August 18 ahead of its record date for determining eligible shareholders for the final dividend of fiscal FY22. IRCTC shares will be in focus in this week’s trading session which will commence from tomorrow onward. Markets are closed on Monday due to the Independence Day holiday. IRCTC is going to pay a 75% dividend to its shareholders.

IRCTC has set August 19 as the record date for determining the members entitled to receive the final dividend for the financial year 2021-22.

Last month, IRCTC in its regulatory filing said, the dividend, if declared at the AGM, will be paid within a period of 30 days from the conclusion of the AGM.

The record date and payment date for dividends are different. The record date is when the company takes a note of the eligible shareholders for the dividend benefit. While the dividend payment date comes after the approval in a company’s annual general meeting. The ex-dividend date is the day before the record date.

Generally, to be eligible for dividends of a company, investors are needed to buy shares one or two days before the ex-dividend date. Investors who buy shares after the ex-dividend date will not be eligible for the shareholders.

IRCTC’s shares will turn ex-dividend on August 18, the day before, record date August 19.

The company’s 23rd annual general meeting is scheduled for August 26.

On May 30, the IRCTC board of directors recommended a final dividend of ₹1.50 per equity share at a face value of ₹2 each for the financial year FY22. This dividend is 75% of the paid-up share capital of ₹160 crore.

The final dividend is in addition to a dividend of ₹2 per equity share declared by the company in February this year and it has been already paid.

Last week, on Friday, IRCTC shares settled at ₹666.55 apiece down by ₹3.50 or 0.52% on BSE. The company has a market cap of around ₹53,324 crore.

In Q1FY23, the company reported a 198% growth in net profit to ₹245.52 crore compared to a profit of ₹82.52 crore in Q1FY22. IRCTC’s revenue from operations climbed 250.34% to ₹852.59 crore in the latest quarter as against ₹243.36 crore in Q1FY22. EBITDA or earnings before interest, taxes, depreciation and amortization came in at ₹320.9 crore in Q1FY23 versus ₹111.5 crore in Q1FY22.

On segment-wise performance, during Q1FY23, IRCTC’s all five businesses recorded growth. The revenue in the catering services business advanced to ₹352 crore from ₹56.7 crore YoY. Internet ticketing business revenue climbed to ₹301.6 crore, Rail Neer soared to ₹83.6 crore, tourism surged to ₹81.9 crore and State Teertha rose to ₹33.2 crore.

Analysts at Prabhudas Lilladher said, “We believe ticketing volumes will be keenly eyed in the near term as reversal in 2S class is applicable from July. We expect ticketing volumes of 371mn/391mn in FY23E/FY24E as benefit of incremental business coming in during COVID time stands withdrawn. IRCTC trades at 58x/53x our FY23E/FY24E EPS estimates and we believe current valuations capture strong growth prospects leaving marginal room for earnings surprise.”

The brokerage house has increased its top-line estimates by 5.8%/6.3% for FY23E/FY24E as we re-align our assumptions for catering business, EPS upgrade is only to the tune of ~1-2% odd given the inferior margin profile of the segment.

The analysts have maintained their Hold rating on IRCTC shares with a DCF-based target price of ₹635.

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