IRCTC eyes 15-18% tourism growth, 30% margins in FY26

What changed in IRCTC’s tourism business this quarter

Indian Railway Catering and Tourism Corp. (IRCTC) is leaning on its tourism and hospitality portfolio to extend growth after a strong performance in the December quarter. The company reported a 29% year-on-year jump in tourism revenue in the December quarter, according to its management commentary to NDTV Profit. The momentum was supported by budget hotels and curated travel packages that delivered double-digit growth in Q3. Management also indicated that future annual margins are expected to stabilise at 30%. The update matters because tourism is one of IRCTC’s four operating verticals, alongside catering, internet ticketing, and packaged drinking water (Rail Neer). The company is also preparing a larger push into budget hotels through a public-private partnership model.

Management guidance: tourism growth target and margin expectation

Chairman and Managing Director Sanjay Kumar Jain told NDTV Profit that IRCTC is aiming to grow the tourism segment at 15% to 18% annually. He reiterated that the company is “seeking to close around 15% to 18% annually” for tourism growth. In a separate interaction cited in the provided material, the chairperson also outlined a broader FY26 growth target of 10% across IRCTC’s four verticals. Within that mix, catering is targeted to grow around 9% to 10%, while tourism is guided at around 15%. The margin anchor is also clearer, with management expecting future annual margins to stabilise at 30%. While the commentary does not specify which margin line item this refers to, the statement signals an intent to keep profitability steady even as the company invests for expansion.

Q3 drivers: budget hotels and curated travel packages

The December-quarter update highlighted that budget hotels and curated travel packages recorded double-digit growth in Q3. IRCTC’s tourism footprint includes budget-friendly stays and packaged travel products that it sells through its platform. Management is linking this growth to a broader expansion strategy across tourism and hospitality services. The company’s positioning is supported by its role as a single-window interface for travel and tourism solutions connected to Indian Railways. Unlike pure-play travel portals, IRCTC’s tourism products are integrated with a large rail passenger base. The management commentary suggests that these offerings are becoming a larger contributor within the tourism vertical as the company scales.

FY24 and H1 FY25 snapshot: where each segment stands

The material provided includes segment-level numbers for FY24 and an interim update for H1 FY25, offering context on the relative scale of IRCTC’s businesses. In FY24, the company reported sales growth of 21% year-on-year to ₹4,270 crore, driven by growth in all segments except “state teereth” (as stated). Catering revenue rose 32% year-on-year to ₹1,947 crore, supported by an increase in the number of catering trains. Tourism revenue grew 33% year-on-year to ₹549 crore, while internet ticketing rose 8% to ₹1,295 crore and Rail Neer increased 8% to ₹341 crore. For H1 FY25, sales were reported at ₹2,182 crore, up 9.2% year-on-year, led by 15% growth in catering, 13% in internet ticketing, and 16% in Rail Neer. The tourism business (including state teertha) declined 18% year-on-year in H1 FY25, highlighting that quarterly momentum can vary within the segment.

Hotel expansion plan: 30-35 budget hotels via PPP model

IRCTC plans to collaborate with the Railway Land Development Authority (RLDA) to set up 30 to 35 budget hotels in the years ahead. The proposed investment is over ₹600 crore. Management described the approach as a public-private partnership model, where IRCTC supports hoteliers by investing in basic infrastructure and leveraging available land and demand, while the partner runs operations. In the chairperson’s words, IRCTC has “the market and the land”, invests in basic infrastructure, and relies on partners’ expertise to operate the asset. This model is presented as already working for the company. The timeline shared is that FY26 will include initial steps through tendering, with significant progress expected from FY27 and FY28 onwards. Separately, the material also notes that four budget hotels are operational at New Delhi, Howrah, Puri and Ranchi in existing buildings.

Why IRCTC’s structure gives it a tourism distribution edge

IRCTC was established to professionalise and upgrade catering services on Indian Railways and to manage catering, tourism, and online ticketing operations. The company operates across internet ticketing, catering, Rail Neer, and tourism and train operations, placing it at a junction of travel demand and rail infrastructure. The provided text also notes that Indian Railways hospitality and catering services serve over 13 million passengers daily, and IRCTC’s catering and hospitality services generate over ₹6,000 crore annually as total business. That scale creates a captive demand pool that can be cross-sold tourism offerings, including budget hotels and curated packages. The company’s stated mission includes enhancing customer services and facilitation in catering, hospitality, travel and tourism with industry practices. It also aims to promote tourism through budget hotels, special tour packages, and online reservation systems. This operating structure helps explain why management is emphasising tourism growth alongside core rail-linked services.

Market impact: what the guidance implies for investors and the sector

The December-quarter tourism revenue growth of 29% year-on-year, combined with management’s 15% to 18% annual tourism growth target, sets a measurable benchmark for tracking execution. The guidance that overall growth across four verticals is targeted at 10% in FY26 provides a second reference point for consolidated performance. A margin stabilisation expectation of 30% suggests management intends to balance expansion with profitability discipline, even as it prepares to invest over ₹600 crore in budget hotels over time. Segment data also shows that IRCTC’s growth drivers are not uniform in every period, as tourism revenue declined 18% year-on-year in H1 FY25 even though Q3 commentary indicates improved traction. For customers, expansion in budget hotels near stations could increase the availability of standardised, rail-linked stays, especially for economy and budget-conscious travellers. For the broader travel industry, IRCTC’s budget hotel push increases competition in the value segment, while its platform distribution remains tied to the rail ecosystem.

Analysis: linking Q3 momentum with FY26-FY28 execution

IRCTC’s tourism narrative has two parallel tracks in the provided information. The first is near-term performance, where curated packages and budget hotels recorded double-digit growth in Q3 and tourism revenue rose 29% year-on-year in the December quarter. The second is the multi-year capacity build-out, with 30 to 35 budget hotels planned through a PPP approach, and execution expected to gather pace in FY27 and FY28. The FY24 base numbers show tourism at ₹549 crore, materially smaller than catering and internet ticketing, which means percentage growth in tourism can meaningfully move the segment but may still take time to alter consolidated mix. The PPP model reduces operational burden for IRCTC while still requiring coordination on land, tenders, and partner selection, which is why FY26 is positioned as an initial tendering year. The management target of 15% tourism growth in FY26 sits alongside the broader 10% growth target for all verticals, indicating tourism is expected to outpace the company average. If margins do stabilise at 30% as stated, investors may focus on whether expansion in hotels and packages sustains profitability as volumes scale.

Conclusion: what to track next

IRCTC is signalling continued focus on tourism and hospitality, backed by a 29% year-on-year rise in tourism revenue in the December quarter and double-digit growth in budget hotels and curated packages in Q3. Management has guided for 15% to 18% annual tourism growth and expects future annual margins to stabilise at 30%, while targeting 10% growth across all four verticals in FY26. The most concrete medium-term lever is the plan to develop 30 to 35 budget hotels with RLDA, with an investment of over ₹600 crore under a PPP framework. FY26 is expected to be the year of initial steps through tendering, while FY27 and FY28 are positioned as heavier execution years. Investors will likely monitor tender progress, segment growth consistency across quarters, and how the hotel rollout translates into tourism revenue over time.