Share Price of IRCTC Gains 1.06%Despite Recent Setback: Key Insights

Share Price of IRCTC Rises Despite Recent Decline

The share price of IRCTC saw a 1.06% gain on October 18, 2024, after tumbling over 2% the previous day. The drop was triggered by a significant policy change by Indian Railways, reducing the advance reservation period for train bookings from 120 days to 60 days, effective from November 1, 2024. This decision directly impacts IRCTC, as e-ticketing is a crucial component of its revenue stream.

Impact of Reduced Reservation Period on IRCTC

Indian Railways’ decision to shorten the advance reservation period could have broader implications for IRCTC’s business. Currently, 80-85% of IRCTC’s revenue is derived from its e-ticketing segment, the second-largest revenue generator for the company. A shorter booking cycle might result in fewer cancellations and reduced revenue spreads for IRCTC, potentially impacting its overall financial performance.

The move, while aimed at operational efficiency for Indian Railways, raises concerns about the future revenue trajectory of the state-run giant. However, the modest rebound in the share price of IRCTC on October 18 signals cautious optimism among investors.

IRCTC’s Financial Performance in Q1FY25

For the June 2024 quarter, IRCTC reported solid financial growth with a 33% year-on-year (YoY) increase in net profit. Revenue also grew by 11.8% YoY, reaching Rs 1,120.2 crore. The company’s Internet Ticketing business, a major contributor to its revenue, saw its earnings rise to Rs 329 crore from Rs 290 crore in the same quarter last year. However, this figure represented a slight decline compared to the Rs 342 crore posted in the March 2024 quarter.

Despite the strong Q1 performance, the recent decision by Indian Railways introduces uncertainty for future quarters, particularly concerning e-ticketing revenue.

Shareholding and Market Trends

As per the September 2024 shareholding pattern, the Indian government holds a 62.40% stake in IRCTC, maintaining a strong influence over the company’s operations. The share price of IRCTC is currently trading below both its 20-DMA and 50-DMA, signaling a short-term bearish trend.

For the week, the share price declined by 1.03%, and for the month of October so far, it has dropped by 5.2%. On a year-to-date (YTD) basis, the share price has seen a marginal decline. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.