IRCTC hits new high, zooms 141% since August on announcing stock split plan

IRCTC has fixed October 29, 2021, as the record date, to ascertain the name of shareholders entitled for subdivision/split of equity shares from Rs 10 to Rs 2

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) continued their upward movement in Thursday's session to scale a new high of Rs 5,593.85 on BSE, following a 13.5 per cent rally in the intra-day trade on the back of heavy volumes.

At 01:37 pm, the stock of the state-owned travel support services company was quoting 12 per cent higher at Rs 5,532, as compared to a 0.50 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped nearly 1.5 times, with a combined 11.73 million equity shares having changed hands on the NSE and BSE so far.

Since August, the market price of IRCTC has more than doubled or risen 141 per cent after the company on July 30, 2021, announced a stock split plan. On August 12, 2021, the board of IRCTC approved a stock split in the ratio of 1:5 to enhance the liquidity in the capital market, widen the shareholder base and make the shares affordable to small investors.

IRCTC has fixed October 29, 2021, as the record date to ascertain the name of shareholders entitled for subdivision/split of equity shares of Rs 10 each into five (5) equity shares of the face value of Rs 2 each. The scrip will turn ex-date for stock split on October 28, 2021.

A stock split is generally done to make the stock more affordable for small retail investors and increase liquidity. It refers to splitting the face value of the shares of companies, wherein the number of shares of the company increases but the market cap remains the same. Existing shares split, but the underlying value remains the same. As the number of shares increases, the price per share goes down.

IRCTC is the only entity authorised by the Indian Railways to provide catering services to railways, online railway tickets and packaged drinking water at railway stations and trains in India. It has a dominant position in online rail bookings and packaged drinking water with around 73 per cent and 45 per cent market share, respectively.

Meanwhile, according to the July-September quarter (Q2FY22) shareholding pattern filed by IRCTC, domestic mutual funds (MFs') stake in the company declined to 4.78 per cent from 7.28 per cent at the end of the June quarter (Q1FY22). Nippon Life India and Aditya Birla Sun Life's holding, for instance, fell below 1 per cent from 1.38 per cent and 1.04 per cent, respectively, at the end of the previous quarter, data show.

Foreign portfolio investors (FPIs) also reduced their stake in IRCTC by 0.26 percentage points to 7.81 per cent from 8.07 per cent in Q1, data shows. However, retail investors accumulated IRCTC shares during the quarter. Individual shareholders, which owned up to Rs 2 lakh share capital with an 11.26 per cent stake, increased their stake in the company to 14.17 per cent.