The ministry of railways is all set to withdraw the decision that Indian Railway Catering and Tourism Corporation (IRCTC) has to share 50 per cent of the revenues earned by it from convenience fee. Department of Investment and Public Asset Management (DIPAM) secretary confirmed this decision on social media platform Twitter. This move came after IRCTC stocks had slumped sharply on Friday. On October 28, the railway ministry asked the e-ticketing and catering arm of the Indian Railways to share the revenue with the ministry.
IRCTC share plunged as much as 29 per cent to hit an intraday low of ₹ 650.10 on the BSE on Friday after the railway ministry’s decision. “…it is to be informed that Ministry of Railways…has conveyed its decision to share the revenue earned from convenience fee collected by IRCTC in the ratio of 50: 50 w.e.f 1st November 2021,” the company said in a filing to the stock exchange on Friday.
IRCTC earned Rs 299.13 crore from the convenience fee during 2020-21, according to the annual report. However, the revenue dropped due to Covid-19 pandemic in India and subsequent restrictions on travelling. IRCTC had earned Rs 349.64 crore in 2019-20.
After the revenue sharing decision, V K Vijayakumar, chief investment strategist at Geojit Financial Services, “Government asking IRCTC to share 50 per cent convenience fee with the railway ministry is yet another instance which should warn investors of undue optimism while investing in PSU stocks. Enhancing shareholder return is not the objective of PSUs. So investors have to be careful while chasing PSU stocks, even if they are cheap.”
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