IRCTC soars 20% in a week post fixing Oct 29 as record date for stock split

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) hit a new high of Rs 4,512 after surging 8 per cent on the BSE in Wednesday’s intra-day trade, on the back of heavy volumes, ahead of 1:5 stock split. The trading volumes on the counter more-than-doubled today, with a combined 7.02 million equity shares having changed hands on the NSE and BSE till 11:19 am.

In the past one week, the stock of the state-owned travel support services company has rallied 20 per cent after the company on September 29, 2021, said that it 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. In comparison, the S&P BSE Sensex was up 0.54 per cent during the period.

In the past one month, the market price of IRCTC has soared 50 per cent, as compared to a 2.5 per cent rise in the S&P BSE Sensex. While, in six months, it has zoomed 106 per cent, as against a 13 per cent gain in the benchmark index.

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.

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 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.