What a roller-coaster ride it has been for all the shareholders of IRCTC Limited. On October 19, the PSU stock rose by 9 per cent to hit an all-time high of Rs 6,393, becoming the ninth public sector entity to join the club of Rs 1 lakh crore market capitalisation (m-cap). However, the stock witnessed a sudden correction of more than Rs 1,000 amid profit booking and ended 8.75 per cent lower at Rs 5,363 on the Bombay Stock Exchange (BSE).
On October 28, the shares rose 15 per cent as the stock traded ex-split. The stock again tumbled 28.8 per cent to hit an intraday low of Rs 650.1 on BSE today after the contentious decision by the ministry that asked it to share 50 per cent of its revenue earned as a convenience fee from website bookings.
However, the PSU stock recovered sharply after the Ministry of Railways withdrew the decision of 50-50 sharing of convenience fee on IRCTC today. At 11:58 hours, the shares were trading 5.87 per cent lower at Rs 860.10 on BSE. Market cap of the company fell to Rs 68,808 crore.
The DIPAM Secretary has said that the Ministry of Railways has withdrawn its decision of 50:50 sharing of convenience fee on e-ticketing on IRCTC. "Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee," the DIPAM Secretary tweeted.
The large-cap stock has delivered 224 per cent return in the last 12 months and has risen 200 per cent since the beginning of this year. The shares stand lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.
"After the Ministry of Railways withdrew the decision to share the revenue earned from convenience fees collected by IRCTC in the ratio of 50:50 from November 1, the shares of IRCTC bounced back from the previous lows. Technically, all moving averages are showing an uptrend but the RSI is still in the bearish zone. Investors may take a fresh long position for the target of Rs 980 with a stop loss of Rs 800," Mr. Ravi Singhal, Vice-chairman, GCL securities Limited told BusinessToday.In.
According to MarketsMojo, the technical trend has improved from Mildly Bullish on October 4, 2021, and the stock is technically in a Bullish range now. Multiple factors for the stock are Bullish like MACD, Bollinger Band, KST, DOW, and OBV. The stock is trading at a premium compared to its average historical valuations and it has a Very Expensive valuation.
According to Dolat Capital, IRCTC is a multi-year high-growth compounding story. The company witnessed a significant jump in passenger volumes travelling (expected to go up 100 per cent quarter-on-quarter) as the COVID-19 impact eased out, leading to a resumption of more train services/frequencies. This would drive a revival in the ticketing business in Q2 and the rest of the other segments by Q3.
"An uptick in the number of passengers and tickets booked as well as in the number of trains operating should result in robust revenue growth in Q2 FY22," said IDBI Capital.
"We expect a strong sequential pick-up in revenues driven by the internet ticketing and catering business. We estimate that the share of catering business should increase to 41 per cent, while the internet ticketing segment should continue to contribute the highest towards overall revenues (+49 per cent share)," it stated in its research report.
IRCTC stock split
Amidst the roller-coaster ride, founder and CEO of the online brokerage firm Zerodha, Nithin Kamath apprised investors of how the IRCTC stock split would impact them. "If you had 1 share of IRCTC at a price of Rs 4,500, you will now have 5 shares at Rs 900 each - 4 new shares will be credited in 4 days after the stock split. This makes no difference in terms of the value of the stock. It isn't cheaper just because the price is lower," he tweeted.
Kamath further added that corporate actions (stock split, bonuses, rights issues) raise the number of shares in a company and actually reduce the price of the stock, thus making no difference to the value. He mentioned that it was akin to having a single 100 gms chocolate or 5 pieces of 20 grams each.
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