Widely read:
What happened?
The share price of IRCTC has been witnessing a steep fall after giving over 50 per cent returns during the past month. It fell after the Ministry of Railways made a controversial announcement on October 28, 2021. It asked IRCTC to share 50 per cent of the convenience fee it earns with the Indian Railways. This triggered an adverse reaction in the market as the company's share price plummeted by 25 per cent. The market reaction has prompted the Ministry of Railways to reverse its decision. This has led to a short recovery of the stock.
So what?
IRCTC is considered a top-rated PSU due to its monopoly status. However, its revenue has been drastically affected due to the ongoing covid pandemic. The news about recovery made the market bullish on the stock, but the announcement regarding convenience fees brought investors back to reality to see IRCTC's actual position.
What can happen now?
Investors now would have realised the volatile nature of IRCTC despite the withdrawal of request by the Ministry of Railways. Such unexpected twists may give a reality check to investors regarding how they see and value IRCTC. As a result, investors may start acting defensively towards the company till it demonstrates strong growth again in the post-pandemic world.
Read more about IRCTC and other PSUs:
IRCTC: Comprehensive financial, price performance & history, Big shareholders and annual reports
IPO on track!!! Can the monopoly of IRCTC withstand the tide of change?
PSU investing has a special set of hazards, and if you tackle them, then some great advantages
Disclaimer: This content is for information only and should not be considered investment advice or a recommendation.
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