IRCTC Plunge 25% On Sharing Convenience Fee With Railways

In Friday’s opening trades, shares of Indian Railway Catering & Tourism Corporation (IRCTC) fell 25% to Rs 685 apiece after the Indian Railways’ online ticketing arm was ordered to split half of its convenience charge with the Railway Ministry.

“With effect from November 1, the ministry of railways has conveyed its decision to split the revenue obtained from the convenience charge collected by IRCTC in a 50:50 ratio,” IRCTC stated in a notice to the stock markets.

IRCTC has been asked to share half of its convenience charge revenue from website bookings with the national transporter, a practise that had been stopped since the pandemic. The Railways Ministry has stated that the revenue-sharing arrangement will be implemented on November 1st, according to the IRCTC.

In 2014, the IRCTC and the Indian Railways began sharing in an 80:20 ratio. In 2015, the ratio was modified to 50:50, although the charge was removed for three years starting in November 2016.

The convenience charge was the IRCTC’s greatest source of revenue in 2020-21. Due to Covid-related restrictions, revenue from catering and comprehensive services declined from Rs 512.45 crore in 2019-20 to Rs 87.31 crore in 2020-21.

It is the only business authorised to administer food services on trains and significant static units at railway stations, the company has a strong monopoly. IRCTC shares became ex-split on Thursday, after the board approved a 1:5 stock split on August 12 to help increase capital market liquidity, broaden shareholder base, and make shares more affordable to small investors.