InvestorQ : Why is the rally in the stock of IRCTC still continuing relentlessly? What is the big story behind the stock?
Chandralekha Desai made post

Why is the rally in the stock of IRCTC still continuing relentlessly? What is the big story behind the stock?

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NISHA Nayak answered.
2 months ago
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The stock of IRCTC has been on a strong uptrend. It recently became a 10-bagger in the last 2 years since its listing on the Indian stock exchanges. On Thursday, the stock was up by another 13% at Rs.5,594 in the midst of very heavy volumes. IRCTC handles the online ticketing, tourism and the catering services of the Indian Railways and one can either look at it as a captive service provider to the Railways or as a true-blue digital ecommerce play.

Between August and October, the stock of IRCTC has rallied by a whopping 141% after the stock announced a stock split plan. The company plans to split the stock in the ratio of 1:5, that means the par value of the stock will be reduced from Rs.10 to Rs.2. While a stock split does not make a difference to the intrinsic value of the company, it makes a difference to the demand as the split brings the price into a more manageable price range for trading.

The record date for the split has been set at 29-Oct so 28-Oct will be the ex-split date and 27-Oct will be the last day when the stock can be purchased to be entitled for the rights. It is this cum-rights demand that is driving the demand for the stock. IRCTC has a dominant position in online rail bookings and packaged drinking water with around 73% and 45% market share, respectively. Some of the mutual funds have been selling IRCTC shares.

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