Railways Ministry withdraw convenience fee on IRCTC

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IRCTC is the most used public transport to travel intercity or inter-district or interstate. The ministry of railways has withdrawn the convenience fee/charge decision on the IRCTC. As soon as this news was out stock started recovering and a spike was seen in IRCTC’s share price. 

On Friday, that is October 29, 2021, the ministry of the railway has withdrawn its proposal to get 50% of the total convenience fee that is generated by IRCTC. This decision came after the dip of IRCTC’s share price by almost 25%. This was because of the fear of derating due to regulatory risk.

On October 19, 2021, the price of this share was Rs. 1278 (Approx.) on BSE which was decreased to 650 (approx.) almost 49% in terms of percentages. Soon after the news floated the price of the share was approx. 850. 

Santosh Meena, the head of research at Swastika Investments has said that she believes the stocks will be on the sideways in the upcoming days. The upside of this share will be around Rs. 1000 and the downside of these stocks will go down maximum till 700.

The overall fundamentals are still strong enough to counter this but the market probably will not give IRCTC the same valuation as it was given previously. This event will be there in the heads of investors and they will not forget this. This risk will refrain investors from keeping the faith. 

Though this move has got the price of the shares to go up again and fall the fall has been stopped for now, but at the same time what investors cannot take off to their mind is the risk involve and the volatility of this share. The step has only stopped investors from running away from the share and losing money invested. They will certainly be more careful now before investing in this share.

Shareholders’ panic after the continuous fall in price was visible to quite extend. This will only take shareholders’ minds towards going away from the stocks and nothing else. 

Coming back on to the decision, this will benefit IRCTC a lot in the nearer future. The revenue will grow and if the support of the ministry continues then the whole department will be benefited. Thanks to this decision to come in time as well as it has increased the price of the share or stopped the fall of the share price

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