Shares of the Indian Railway Catering and Tourism Corporation (IRCTC) fell 20% on Friday after the company said it would share half of the revenue generated from the convenience fees with the government.
At 9.47am, IRCTC stock was trading 20% less at Rs 731 per share. At 9:15 a.m., the action opened 10 percent less.
IRCTC charges a convenience fee for online reservations, which is one of the company’s main sources of revenue. He brought in around Rs 620 crore in FY20.
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In a statement released Thursday, the IRCTC said the company and the Ministry of Railways would share the revenue generated from the convenience charges in a 50:50 ratio effective November 1, 2021.
IRCTC stocks have experienced high volatility in recent days. The stock has fallen 16% in the past week while it has gained 3% in the past month.
The stock is very volatile today with intraday volatility of nearly 187%, the Markets Mojo website showed.
The stock soared on Thursday after the stock split. The company’s board of directors has given the go-ahead for a 1: 5 stock split, reducing its face value from Rs 10 to Rs 2 each.
In addition, selling pressure seen in the broader markets lately has also prompted some investors to take a cautious stance on the stock.
“Despite the 20% drop indicating investor disappointment with the latest revenue share announcement, IRCTC is a good long-term bet given the business model and firm demand outlook,” said Koushik Mohan , fund manager at Moat PMS.
First publication: STI