Indian Railway Catering and Tourism Corporation (IRCTC) stocks hit a new high of Rs 4,512 after rising 8% on BSE on Wednesday in intraday trading thanks to high volumes prior to a stock split: 5.7.02 million shares a total of the NSE and ESB will change hands at 11:19 am Last week, the state-owned travel company was up 20% after trading five (5) shares with a face value of 2 rupees on May 29. In comparison, the S&P BSE Sensex Index gained 0.54% over the period considered.
Last month, IRCTC's market price rose 50% while S&P BSE Sensex rose 2.5%. While it was up 106% in six months, the benchmark was up 13%.Analysts say there are a number of IRCTC triggers that could keep the action high for future trading sessions "The company has a monopolistic business and the economic recovery coupled with an increase in travel given the vaccination level against Covid-19 infection augur well for the stock.
That apart, there has been a trigger of the stock split, which has partly fuelled the up move," explains Abhishek Jain, head of research at Arihant Capital. On August 1st, 2021, the IRCTC Board of Directors decided to split the shares 1: 5 in order to increase the liquidity of the capital market, broaden the shareholder base and make the shares affordable for private investors. The board of directors decided to divide one share of the company with a face value of 10 rupees into five shares with a face value of 2 rupees each.
IRCTC is the only Indian Railways licensed company providing rail catering services, online train tickets, and packaged drinking water for stations and trains in India. When it comes to online train bookings and packaged drinking water, it has a dominant position with a market share of around 73% and 45% respectively.Another major trigger, analysts say, is the possibility that the stock will be included in the MSCI Standard Index during the November rebalancing.
That alone could mean around $ 170 million in entries into the IRCTC stock with an expected weight of 0.31 percent in that index."We have been flagging off names (SRF, MphasiS, MindTree, IRCTC and Zomato) since early September. All these, along with a new addition Godrej Properties, remain our high conviction inclusion for MSCI Standard Index for November rebalance. If all make the cut, they will see inflow of over $1 billion cumulatively," wrote analysts at Edelweiss Alternative Research in a recent note..
Sources:- Business standard
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