IRCTC shares in focus, rally post stock split
IRCTC Shares Price
IRCTC Stock Split: Everything to know about it
Along with the IRCTC stock split, the IRCTC board of directors approved unaudited financial results for the June 30th quarter. Additionally, IRCTC sells online tickets and packaged water in addition to providing catering services for Indian Railways.
In a statement issued on Thursday, the board of directors of Indian Railway Catering and Tourism Corporation (IRCTC) announced that the company’s equity shares will be split into five. This means that one-tenth of a share will be split into five equity shares with a face value of *2, each.
Announcement about IRCTC Stock Split
Railway’s ministry and other shareholders have to approve the move, IRCTC said.
According to a statement from the IRCTC, “the Board recommended dividing five (5) equity shares into one (1) equity share of face value $10 in each, subject to approval by the Ministry of Railways, shareholders, and any other necessary approvals.”
As compared to the same period last year, operating revenue jumped 85.4 percent to Rs 243 crore. Also, the board of the IRCTC has approved splitting one share of Rs 10 face value each into five shares of Rs 2 face value each. Railway Ministry approval is required for this project.
Quarterly Results and IRCTC’s track record
The news of IRCTC’s stock was released along with the company’s results for the quarter ending June 2021. The company reports a net profit of Rs 82 crore, and an increase from the Rs 24 crore net loss recorded in the same quarter last year. IRCTC’s revenue from operations increased by 85% from the same quarter last year. For June 2020, it was Rs 131 crore, but in June 2021, it increased to Rs 243 crore.
IRCTC operates in the four segments of ticketing, travel and tourism, catering and drinking water. It exercises close to a monopoly in these segments as it is the preferred destination for booking tickets, and its Rail Neer accounts for one in two water bottles sold in railway stations. In its catering division, IRCTC has partnered with private tech platforms such as Ixigo and MobiKwik.
The IRCTC operates in a monopolistic market, a factor that is attractive to many investors. It has a strong cash flow as a business-to-customer (B2C) venture. The news of IRCTC’s stock split was well-received by investors as it led to a record hike in the price of its stocks. Moreover, as the restrictions put in place due to the COVID-19 pandemic are easing, some developments signal a better performance of the IRCTC stock.
E-catering services have been recommenced on trains. In early August, the stock gained after the announcement of Mumbai local trains being opened to fully vaccinated passengers. Added to this, an increase in the spending on railway infrastructure is also boosting the prices of IRCTC. The introduction of more private trains into the Indian Railways will also open additional sources of revenue for the company.
For small investors, the IRCTC stock split and other positive news around the share should be encouraging. The stock split will not affect the company’s valuation, and small investors will be able to purchase the shares of a reliable government PSU with strong growth prospects. Experts advise small investors to buy these shares now because the stock is expected to regain the same value as its price before the split in the coming few years.