MFs book profit in IRCTC, trim stake by 2.5% as stock zooms 87% in Q2

In Q2, domestic mutual funds' stake in IRCTC declined to 4.78 per cent from 7.28 per cent in Q1

Domestic mutual funds (MFs) offloaded 4 million, or 2.5 per cent stake, in Indian Railway Catering and Tourism Corporation (IRCTC) in July-September quarter (Q2FY22), as stock of the state-owned travel support services company reported a record 87 per cent rally during the quarter.

According to Q2 shareholding pattern filed by IRCTC, MFs' stake in the company declined to 4.78 per cent from 7.28 per cent at the end of 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 11.26 per cent stake, increased their stake in the company to 14.17 per cent.

Most of the MFs and FPIs bought IRCTC shares in offer for sale (OFS) of the company. In December 2020, the Ministry of Railways, being the Promoter, disinvested 32 million equity shares, diluted 20.003 per cent of its stake in IRCTC. The floor price for the offer was fixed at Rs 1,367.

On Friday, October 8, 2021, the stock of IRCTC hit a record high of Rs 4,965 in intra-day trade. At 12:05 pm;, the stock was trading flat at Rs 4,894, recovering 4 per cent from its intra-day low of Rs 4,697 on the BSE. It opened at Rs 4,909. In the past three months, the stock has zoomed 122 per cent as compared to a 15-per cent rise in the S&P BSE Sensex.

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. The board decided to split one equity share of the company at a face value of Rs 10 into five equity shares at a face value of Rs 2 each.

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 face value of Rs 2 each.

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.