The Ministry of Railways has decided to withdraw its decision on sharing of convenience fee earned by the Indian Railway Catering and Tourism Corporation (IRCTC) on online bookings of train tickets.
“Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee,” DIPAM Secretary Tuhin Kanta Pandey tweeted on Friday (October 29).
Santosh Meena, Head of Research, Swastika Investmart Ltd. said, “It was a roller-coaster ride for the IRCTC where it fell around 25 per cent in the Friday morning session after overnight news that Government asked the company to share half of its convenience fee from the Internet booking with it, but we have seen the reversal of this decision around 11 am that led to a short-covering in the counter.”
IRCTC was trading at Rs 859.25 down almost 6 per cent while it recovered from the morning lows.
“The stock will remain sideways in the coming days where the upside will be capped around 1000 level and the downside will be protected around 700 level. Overall fundamentals are still strong for this counter, but the market will hesitate to give valuations that it was enjoying before this event because such kind of risk will remain in the mind of investors,” Meena added.
The roller-coaster ride led to a sharp rise in option IVs, i.e, the value of OTM options, therefore, option writers and arbitrageurs are looking at it as a golden opportunity as uncertainty is out of the window for the time being. The option writer may try to keep this counter range-bound for November.
IRCTC, the only firm authorised by the Indian Railways to manage food services on trains and offer online railway ticket booking services, earns a sizeable chunk of its revenues from convenience fee.
As reported by PTI, the Indian Railway Catering and Tourism Corporation (IRCTC) in a regulatory filing on Thursday, had said that it will share the revenue earned from convenience fee collected by it in the ratio of 50:50 with effect from November 1.
(With agency inputs)
