Shares of state-owned travel support services company Indian Railway Catering and Tourism Corporation (IRCTC) continued at their upward movement as the scrip rallied 9 per cent to hit a new high of Rs 3,746 in intra-day trade on Tuesday.
The stock was quoting higher for the eighth straight trading day, having rallied 37 per cent during the period. With the sharp rally in IRCTC, the stock is now currently trading 1,071 per cent higher over its issue price of Rs 320 per share. IRCTC had made its stock market debut on October 14, 2019.
In the past four months, the stock has zoomed 114 per cent, as compared to a 19.6 per cent rise in the S&P BSE Sensex. It skyrocketed 190 per cent from its 52-week low of Rs 1,291 touched on November 4, 2020. Currently, IRCTC stands at number 82 position in the overall market capitalisation ranking, the BSE data shows.
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.
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. This is subject to the approval of the Ministry of Railways.
A stock split is generally done to make the stock more affordable for the 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 in the FY21 annual report said that is planning to launch adventure tour packages and give emphasis on customised tour packages, especially for a small group of families and friends. It is also planning to operate cruise packages in the International & Domestic market if the scenario of the tourism market stabilises in future months, the company said.