IRCTC shares in focus, rally after share split

While announcing its first quarter earnings, IRCTC had unveiled its stock split plans as the board approved the proposal of 1:5 stock split, i.e., for a split of 1 share at face value. ₹5 equity shares of Rs.10 each at a face value of Rs. ₹2 each.

“While IRCTC is a fundamentally strong stock, the current valuation is still very high, given the recent decline in the stock price. Existing investors should hold their stock while new investors should look at valuations before taking any new positions. Gotta wait for it to be right.” Divam Sharma, Co-Founder of Green Portfolio, SEBI registered Portfolio Management Services.

Indian Railways’ PSU stock has been in a constant race to deliver great returns to its shareholders since its listing in October 2019. The stock split will help in increasing liquidity in the capital market, widening the shareholder base and making the shares affordable for small investors. It was said

“With IRCTC fundamentally strong on its monopoly, the stock looks technically sound as well as it is taking support near the previous breakout. Investors can buy the stock as the lower price will make it look cheaper, hence creating demand for the stock,” said Manoj Dalmiya, Founder and Director-Proficient Equities Ltd.

The state-owned company entered the primary markets by listing in October 2019 and enjoys a strong monopoly. It has 100% market share in the rail network. It is the only unit authorized to manage catering services in trains and major stationary units at railway stations.

A stock split increases the number of shares outstanding by issuing more shares to existing shareholders. A stock split reduces the market value of individual shares, however, the market capitalization of the company does not change.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.