Indian Railway Catering Tourism Corp. said it will not face any competition from Adani Group's acquisition of Trainman, countering claims of Congress spokesperson Jairam Ramesh that it was an attempt to take over the Navratna public sector company.
Trainman is one of the 32 business-to-consumer partners of IRCTC, contributing 0.13% of the total reserved ticketing volumes, according to a statement by the government-controlled company. The acquisition by any other agency will not change the "application of the extant B2C policy in anyway" and all the integrations and operations will "continue to be done through IRCTC".
Adani Enterprises Ltd. said on Friday that it would acquire 100% of Stark Enterprises, the operator of train ticket booking platform Trainman.
According to IRCTC, it has partnered with many agencies under the business-to-business, business-to-consumer and e-governance schemes to complement its reach, and there is no competition between IRCTC and its agents.
The B2C firms are integrated with IRCTC to provide reserved e-ticketing services to customers directly through their websites or mobile apps via IRCTC API, the statement said.
Ticketing contributed 33.8% of its revenue in FY23, down from 54% in FY22, while catering accounted for 41.7% versus 27% in the previous fiscal.
According to ICICI Direct, IRCTC is one of the most profitable e-commerce platforms in India with FY23 revenue of Rs 3,540 crore and net profit margin of about 30%. IRCTC's competition is not other booking portals but offline railway ticketing (and airlines), the brokerage said.
The key risk for IRCTC is government policy, according to ICICI Direct. The company earns money by charging a convenience fee for booking tickets online. In October 2021, the government unilaterally announced it will take 50% revenue share of this fee, prompting a 20% single-day drop in its shares.
ICICI Direct finds this profitable monopoly stock inexpensive and expects re-rating if the government reconsiders its policy on fee sharing. In 2016, to promote online sales, the government mandated IRCTC to waive convenience fee entirely.
Shares of IRCTC were trading 0.29% higher at 12:13 p.m. compared with a 0.24% decline in Nifty 50.
Disclaimer: AMG Media Networks Ltd., a subsidiary of Adani Enterprises Ltd., holds 49% stake in Quintillion Business Media Ltd., the owner of BQ Prime.
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