IRCTC jumps 20% in a week before stock split

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) hit a new high of ~4,512 apiece after surging 8 per cent on the BSE in Wednesday’s intraday trade, on the back of heavy volumes, ahead of the 1:5 stock split. The stock finally closed at ~4,463.65, up 7.13 per cent.

Over the past week, the stock of the state-owned travel services company has rallied 20 per cent after it fixed October 29 as the record date, to ascertain the name of shareholders entitled for subdivision/split of equity shares of ~10 each into five equity shares of face value of ~2 each.

In the past month, the market price of IRCTC has soared 50 per cent, against a 2.5 per cent rise in the Sensex.

Analysts say there are a number of triggers in favour of IRCTC which can see the stock remain in focus over the next few trading sessions. “The company has a monopolistic business and the economic recovery, coupled with an increase in travel, given the higher vaccination levels, augurs well for the stock. That apart, there has been the trigger of the stock split,” explains Abhishek Jain, head of research at Arihant Capital.

On August 12, 2021, the board of IRCTC approved a stock split in the ratio of 1:5 to enhance liquidity in the capital market, widen the shareholder base, and make its shares affordable. IRCTC is the only entity authorised by the Indian Railways to provide catering services on trains, online tickets, and packaged drinking water at railway stations and trains.