Amid IRCTC stock price drop, equity schemes' net asset value takes a hit

Equity funds collectively held Rs 2,879 cr worth of IRCTC shares at the end of September

The over 16 per cent slump in shares of Indian Railway Catering and Tourism Corporation (IRCTC) has made a dent in the net asset values (NAVs) of several mutual fund (MF) equity schemes.

Equity funds collectively held Rs 2,879 crore worth of IRCTC shares at the end of September, shows data provided by Value Research.

Nearly 2.5 per cent, or Rs 295 crore, worth of Nippon India Growth Fund's corpus is deployed in IRCTC. For Motilal Oswal Midcap 30 Fund it is nearly 9 per cent, or Rs 213 crore. To be sure, the figures are as on September. The holding structure of the funds could have changed subsequently.

“The stock had risen to exuberant levels and correction was on cards. Even now, after the recent fall, valuations are a bit stretched, but long-term fundamentals of the company still remain strong,” said a senior official from the mutual fund industry.

There are around nine equity schemes that have invested more than Rs 100 crore in the stocks of IRCTC as on September end. Some of the schemes which hold IRCTC have seen a fall of its net asset value (NAV) in the range of 1.5-3 per cent in the last couple of days.

In the last few days, domestic equities have seen a sharp correction due to concerns over rising inflation and its impact on corporate earnings. 

IRCTC is authorised by Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India.

The latest fall notwithstanding,several MF schemes are sitting on healthy gains on IRCTC. Its shares are still up 3.4 times in the last one year as compared to 49.7 per cent gain made by the benchmark Sensex.