After falling as much as 40 percent in the intraday trade, the share price of Indian Railway Catering and Tourism Corp (IRCTC) recovered most of the losses after railways is withdrawing the decision to share the convenience fees.
Railways is withdrawing the decision on Indian Railways Catering and Tourism Corporation (IRCTC) convenience fees for, DIPAM secretary Tuhin Kanta Pandey told CNBC-TV18.
A senior Railways official told Moneycontrol that the convenience fees sharing had been there before the pandemic.“It was made 100 percent to the company only for the pandemic,” the official said, asking not to be named.
Indian Railway Catering and Tourism Corp (IRCTC) share price locked at 20 percent lower circuit in the early trade on October 29 after the railway ministry asked the company to share its revenue earned from convenience fee.
It has touched an intraday high of Rs 906.60 and an intraday low of Rs 650.10.
"It is to be informed that Ministry of Railways has conveyed its decision to share the revenue earned from convenience fee collected by IRCTC in the ratio of 50: 50 w.e.f. November 1, 2021," company said in a release.
The Indian Railways has authorised IRCTC to facilitate the booking of tickets, provide catering services and packaged drinking water in trains and railways stations.
“The government asking IRCTC to share 50 percent convenience fee with the Railway Ministry is yet another instance which should warn investors of undue optimism while investing in PSU stocks,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“Enhancing shareholder return is not the objective of PSUs. So investors have to be careful while chasing PSU stocks, even if they are cheap,” he said.
In the previous trading session, the share closed 10.65 percent or Rs 87.94 higher at Rs 913.75 on sub-division of the share price.
The company had has fixed October 29 as the record date to ascertain the name of shareholders entitled to sub-division of equity shares of Rs 10 each into five equity shares of Rs 2 each.
The company’s board of directors will meet on November 1 to consider and approve the unaudited financial results for the second quarter and the half-year ended on September 30, 2021.
At 12:12 hrs IRCTC - Indian Railway Catering & Tourism Corp was quoting at Rs 844.00, down Rs 69.75, or 7.63 percent on the BSE.