Analysts attribute this underperformance to a shift in investor perception from valuing IRCTC as a high-growth digital platform to a mature and heavily regulated business. Moreover, IRCTC’s earnings growth has remained relatively soft despite a nearly 3x jump in revenue over the past five years, and the persistent margin compression has emerged as a key overhang on the stock’s performance. 

Sunny Agrawal, head of fundamental research at SBI Securities, said that earnings have remained subdued for IRCTC due to an adverse mix shift, with growth coming from low-margin segments like catering, tourism, and Rail Neer, while the high-margin ticketing business remains stagnant. He said that online railway ticketing is highly penetrated, leaving little room for explosive volume growth, and the future growth depends on Indian Railways’ passenger growth rather than IRCTC’s own initiatives. 

“IRCTC’s problem is not poor business performance; it is the absence of a strong growth narrative to justify a premium valuation,” Sunny said. 

IRCTC Earnings, margin

As per ACE Equity data, IRCTC’s net profit nearly doubled from ₹659.5 crore in FY22 to ₹1,393.5 crore in FY26, rising from ₹1,005.8 crore in FY23, ₹1,111 crore in FY24 and ₹1,314.9 crore in FY25. Revenue growth was also robust, with the railway company reporting a topline of ₹1,876.6 crore in FY22, which surged to ₹3,541.5 crore in FY23 and continued its upward trajectory to ₹4,260.2 crore in FY24, ₹4,674.8 crore in FY25 and ₹5,214.9 crore in FY26. 

Despite the sustained rise in both revenue and profitability, IRCTC’s operational efficiency remained under pressure. The company’s Ebitda margin moderated from around 50 per cent in FY22 to 38 per cent in FY26. 

IRCTC Stock Valuation

Also, Sunny said that the stock traded at very high P/E multiples post-listing in October 2019. “Earnings have continued to grow, but lagged behind valuation, leading to multiple compressions.” 

At the upper price band of ₹320, IRCTC was valued at 16.8x its FY19 EPS of ₹19. Notably, the IRCTC IPO was a blockbuster, with subscriptions exceeding 110 times, and its shares delivered a listing gain of 127 per cent. IRCTC currently trades at a P/E of 29.69x. 

Analysts said that IRCTC’s performance is a stark reminder that even monopoly franchises are not immune to valuation compression and prolonged sentiment cycles.

IRCTC re-rating remains elusive

Echoing a similar view, market expert Avinash Gorakshakar said that a shift toward high-volume, lower-margin catering businesses over ultra-high-margin internet ticketing businesses has kept IRCTC under pressure. Around 85-90 per cent of the railway reservations are done online, leaving very little room for organic growth. 

“IRCTC lacks true pricing power. Unless the company gets complete freedom on pricing from the government and growth comes back in a big way, the stock is unlikely to see any re-rating,” he said.