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IRCTC shares down 21% as circuit filter opened, IIFL slashes price target

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Sentiment for IRCTC stock has taken a beating after the company last evening informed stock exchanges that it will be sharing 50 percent of the convenience fee on online bookings, with the government, effective from November 1.

IRCTC shares down 21% as circuit filter opened, IIFL slashes price target
Indian Railway Catering and Tourism Corporation (IRCTC) shares were down 21 percent to Rs 721 rupees after hitting a low of Rs 640 a short while back. The 20 percent circuit filter in the stock has been opened up by exchanges as investors rush to dump the stock.
Sentiment for the stock has taken a beating after the company last evening informed stock exchanges that it will be sharing 50 percent of the convenience fee on online bookings, with the government, effective from November 1.
Many investors are complaining on social media that the additional shares as a result of the 5:1 stock split effective on October 28, is not yet reflecting in their demat accounts.
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IRCTC shares had soared to a record high of Rs 6400 last week and suddenly nosedived.
Broking firm IIFL has slashed its price target for the stock to Rs 519 from Rs 820 earlier and rated it a sell.
“The Railway Ministry’s decision to impose 50 percent revenue share on IRCTC’s convenience fee income from internet ticketing, from Nov 1, 2021 vs. nil share currently, is a significant negative,” the IIFL note to its clients said.
“Internet ticketing segment sported 85 percent Ebit margin and contributed to 75 percent of Ebit, pre-pandemic. To offset this, IRCTC will have to double the convenience fee charged to the customer, which is unlikely at a time when activity is normalising post the pandemic.
We build in unchanged convenience fee and 50% rev share, which results in 19/32/31 percent cut for FY22ii/23ii/24ii EPS. Though IRCTC has been subject to multiple policy flip-flops in the past, this is the first major negative regulatory development in recent years and may weigh on investor sentiment, potentially leading to de-rating,” the note said.
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