Shares of Indian Railway Catering & Tourism Corporation (IRCTC) plunged by 20 per cent in the first 30-minutes of trade after the Indian Railways' online ticketing arm asked to share 50 per cent of the convenience fee the company earns with the ministry of railways.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

It will have to share half of the revenue it earns from November 1, 2021. The ticketing business accounts for almost 27 per cent of the revenue in FY20.

See Zee Business Live TV Streaming Below:

It is sentiment negative for the stock and could have a similar impact on the other PSU stocks, suggests experts, but the recommendation is to still hold the stock and not sell in a hurry.

The stock which hit a record high of Rs 1278 on 19 October has fallen more than 40 percent to Rs 731 on 29 October (10 AM). After the recent fall, the stock is still up more than 150 per cent so far in the year 2021.

“It is a big negative surprise for the investors of IRCTC where the Govt asks the company to share half of its convenience fee from internet booking with it. It will lead to an accident in the share of IRCTC but also pull the chain of momentum in the other PSU stocks,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.   

“The sentiments were improving for PSU stocks after a positive attitude by the government, but this news may hurt the sentiment badly. It will be difficult to take action after a big gap down opening therefore existing shareholders are advised not to act after a big crackdown because other fundamentals are still strong,” he said.

Meena further added that we could see a dead cat bounce if the government reverse its decision; however, it will be difficult to gain previous valuations for IRCTC because investors will always have risk factor in their backup of mind.

Meanwhile, as the government decided to rollback decision, IRCTC stocks recovered to some extent from early morning trade losses and closed the Friday at Rs 842.05, down Rs 71.70 or 7.85% on BSE on Friday.