IRCTC Nosedives 25% After This Announcement

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IRCTC Nosedives 25% After This Announcement
Credit: © Reuters.

By Malvika Gurung

Investing.com -- The e-ticket booking platform for Indian Railways, IRCTC (NS: INIR ) announced in an exchange filing on October 28 that it will have to share half of its revenue generated from the convenience fee with the ministry of railways, starting November 1, 2021.

“The ministry of railways has conveyed its decision to share the revenue earned from the convenience fee collected by IRCTC in the ratio of 50:50 with effect from November 1,” stated IRCTC in a stock exchange filing.

Analysts have stated that this would likely cost a profit loss of 43% to IRCTC, as the convenience fee (or service charge) charged by the online arm of Indian Railways, is a major/key source of its revenue generation. It is the fee charged to the customers for using the services of the online platform offered by IRCTC.

IRCTC’s shares plunged 25% to Rs 685.15 at 10:00 am on Friday as a result of this news.

The Indian Railways had started this arrangement with IRCTC back in 2014, in the ratio of 80:20 between the two, and continued until 2016-2017. Charging convenience fees were removed from Nov 2016 to promote digital payments, post demonetisation.

However, with the pandemic hitting revenues of Indian Railways hard, IRCTC resumed collecting this fee on e-ticket bookings, starting Sept 2019.

For 2020-21, income generated from convenience fee of Rs 299.13 crore, was the largest contributor to IRCTC’s revenue, which was Rs 349.64 crore in 2019-20.

A senior official at IRCTC stated that the ticketing volume has now risen to 13 lakh/day from 7 lakh/day pre-pandemic. So even if the ministry takes half the revenue, IRCTC’s bottom line wouldn’t change much.

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  • phani kishore @phani kishore
    so as per your version, IRCTC might have predicted the pandemic earlier.. so for the pandemic that hit India in Feb 2020, IRCTC started collecting the fee from Sept 2019
    Like 0
  • Utkarsh Bothra @Utkarsh Bothra
    Pure manipulation of stock . One more reason for retail traders and investors to stay away from stock markets
    Like 3
  • Utkarsh Bothra @Utkarsh Bothra
    Pure manipulation of stock . One more reason for retail traders and investors to stay away from stock markets
    Like 2
  • Utkarsh Bothra @Utkarsh Bothra
    Pure manipulation of stock . One more reason for retail traders and investors to stay away from stock markets
    Like 1
  • Vijay ragavan @Vijay ragavan
    it is just trap to the retailers
    Like 0
  • Deepak Kumar @Deepak Kumar
    news doesn't decide any stock movement or index at all. It is just to trap the retailer, that's all.
    Like 2
    • Sahil Gupta @Sahil Gupta
      @Deepak Kumar I didn't understood... How the retailer is trapped here ? By Retailer you meant IRCTC right ?It's a profit loss for IRCTC for sure ...
      Like 1
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