BOOM

Trending Searches

    SUPPORT
    BOOM

    Trending News

      • Fact Check 
        • Fast Check
        • Politics
        • Business
        • Entertainment
        • Social
        • Sports
        • World
      • Law
      • Explainers
      • News 
        • All News
      • Decode 
        • Impact
        • Scamcheck
        • Life
        • Voices
      • Media Buddhi 
        • Digital Buddhi
        • Senior Citizens
        • Videos
      • Web Stories
      • BOOM Research
      • BOOM Labs
      • Deepfake Tracker
      • Videos 
        • Facts Neeti
      • Home-icon
        Home
      • About Us-icon
        About Us
      • Authors-icon
        Authors
      • Team-icon
        Team
      • Careers-icon
        Careers
      • Internship-icon
        Internship
      • Contact Us-icon
        Contact Us
      • Methodology-icon
        Methodology
      • Correction Policy-icon
        Correction Policy
      • Non-Partnership Policy-icon
        Non-Partnership Policy
      • Cookie Policy-icon
        Cookie Policy
      • Grievance Redressal-icon
        Grievance Redressal
      • Republishing Guidelines-icon
        Republishing Guidelines
      • Fact Check-icon
        Fact Check
        Fast Check
        Politics
        Business
        Entertainment
        Social
        Sports
        World
      • Law-icon
        Law
      • Explainers-icon
        Explainers
      • News-icon
        News
        All News
      • Decode-icon
        Decode
        Impact
        Scamcheck
        Life
        Voices
      • Media Buddhi-icon
        Media Buddhi
        Digital Buddhi
        Senior Citizens
        Videos
      • Web Stories-icon
        Web Stories
      • BOOM Research-icon
        BOOM Research
      • BOOM Labs-icon
        BOOM Labs
      • Deepfake Tracker-icon
        Deepfake Tracker
      • Videos-icon
        Videos
        Facts Neeti
      Trending Tags
      TRENDING
      • #Operation Sindoor
      • #Pahalgam Terror Attack
      • #Narendra Modi
      • #Rahul Gandhi
      • #Waqf Amendment Bill
      • #Arvind Kejriwal
      • #Deepfake
      • #Artificial Intelligence
      • Home
      • Explainers
      • Explained: Why IRCTC's Share Price...
      Explainers

      Explained: Why IRCTC's Share Price Plunged, Govt Reverses Decision

      The governmental backtrack came less than a day after announcing that it would take 50% of IRCTC's convenience fee income

      By - Mohammed Kudrati |
      Published -  29 Oct 2021 3:06 PM IST
    • Boomlive
      Explained: Why IRCTCs Share Price Plunged, Govt Reverses Decision

      The government has reversed its decision to ask the Indian Railways Catering and Tourism Corporation (IRCTC) to share 50% of its internet ticketing revenue or convenience fee revenue from November 1, the Secretary of the Department of Investment and Public Asset Management announced on Friday. The reversal of the order came less than 24 hours after it was announced on Thursday.


      Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee pic.twitter.com/HXIRLxXTlL

      — Secretary, DIPAM (@SecyDIPAM) October 29, 2021


      The decision, conveyed by IRCTC through the Ministry of Railways on Thursday, faced backlash from investors who responded by heavy selling of the stock. The stock lost nearly 29% at its lowest point, touching ₹650.10. However, post the decision to scrap the order, the stock quickly recovered, trading at ₹856.35, 6.26% lower as of 2:48 pm. An estimate by the Livemint puts this fall at more than ₹18,000 crore lost in market value overnight, all for a cash gain of ₹200 crores.

      Also Read: Explained: Stock Market Price Bands And Circuit Breakers

      The timing of the decision has also been questioned. The decision came on October 28, when the stock of IRCTC split five for one, meaning that an investor would get 5 shares for every one share, with the value of each share being a fifth of the original price. This keeps the market capitalisation (which is the shares outstanding multiplied by the price per share) and its underlying fundamentals unchanged. Investors are yet to receive the additional shares after the split to normalise their holding of the company, which will happen sometime next week. Till then, selling could also be muted that could inhibit profit booking or cutting losses.

      Analysts said that this decision by the government would have reduced IRCTC FY23 earnings by 27% to 30%, calling it a negative development, and they expected a sharp correction in the price of the stock.

      For context, the stock has seen a record rally this year, increasing nearly three times this year in a frenzy. It hit a high of ₹6,393 per share on October 19, from where it fell to ₹4,200-levels (all prices pre-split).

      Currently, the company's latest financials show that internet ticketing segment was the largest of the four segments under which IRCTC - a monopoly in the railway ticketing space - generated revenue. This is the segment of which the government wanted a 50% share, which in turn would have reflected in reduced profits for the company. The company charges every user ₹30 for air-conditioned booking and ₹15 for non-AC bookings, plus tax. If paid through Unified Payment Interface (UPI), the charges are ₹20 and ₹10 per ticket respectively, plus tax.

      IRCTC's unaudited results for the quarter ending June 30 this year (the first quarter of the ongoing financial year) showed that the internet ticketing revenue stood at ₹149.97 crores, nearly 61.7% of the total revenue amounting to ₹243.37 crores. The remaining segments are catering (₹56.1 crores in revenues), Rail Neer (₹29.3 crores) and tourism (₹7.41 crores).

      Internet ticketing is also the largest component in terms of the profit before tax, interest and investment income from each of these segments. Internet ticketing had a revenue of ₹116.86 crores, and Rail Neer ₹1.81 crores, with the latter segment turning a profit in just the last quarter. With interest income of ₹11.59 crores, IRCTC's total profits stood at ₹111.07 crores.

      "The market realizes that a significant revenue source of the company has been taken away. And at the same time, the overall expenditure of the company will continue to remain the same. Given this, the operating profit of the company will also come down dramatically", reported the Livemint.

      IRCTC's first quarter declaration with the Bombay Stock Exchange can be found here. It is expected to declare its second quarter results of the ongoing financial year on November 1.

      Also Read: Nykaa, Policybazaar, Fino Payments: 5 IPOs To Watch Out For

      Tags

      IRCTCStock SplitBombay Stock ExchangeMinistry of RailwaysDIPAMGovernment of India
      Read Full Article
      Next Story
      Our website is made possible by displaying online advertisements to our visitors.
      Please consider supporting us by disabling your ad blocker. Please reload after ad blocker is disabled.
      X

      Subscribe to BOOM Newsletters

      👉 No spam, no paywall — but verified insights.

      Please enter a Email Address
      Subscribe for free!

      Stay Ahead of Misinformation!

      Please enter a Email Address
      Subscribe Now🛡️ 100% Privacy Protected | No Spam, Just Facts
      By subscribing, you agree with the Terms & conditions and Privacy Policy connected to the offer

      Thank you for subscribing!

      You’re now part of the BOOM community.

      Or, Subscribe to receive latest news via email
      Subscribed Successfully...
      Copy HTMLHTML is copied!
      There's no data to copy!