IRCTC shares end upward rally, decline 2% over profit-booking

The overvalued share-price of Indian Railway Catering and Tourism Corporation (IRCTC) gave up some gains on the back of profit-booking by investors and traded in the red territory on Wednesday.

The IRCTC stock gained momentum in the initial hours and rose 1% to the intraday high of Rs 720.55 against the last close of Rs 713.10. Although, later the stock of Rs 10 face value lost ground and traded 2.03% lower at day’s low of Rs 698.60 on the BSE.

As per the market depth data available on the BSE, there is 91% selling against 9% bidders buying the stock at this value. Overall 2.35 lakh and 23.61 lakh shares trade on the counter, BSE and NSE, respectively. The newly-listed company’s market capitalisation on Wednesday stood at Rs 11,280 crore, lower by Rs 328 crore than its first-day closing value of Rs 11,658 crore.

Many rating agencies had declared the stock overvalued as it gave more than 100% profit to its shareholders on its listing day itself and expected a correction in its share value.

Analysts believe the surge in the company’s share value is fundamentally backed by the mismatch between too much demand by investors and relatively less supply, which has been the case since its IPO release. As per market participants, the company’s monopoly in ‘catering, tourism and online ticketing’ sector, coupled with its sound financials, created an excess demand by traders.

On its debut day, the IRCTC’s shares had risen 127% against the issue price of Rs 324 on the BSE and 130% on the NSE, by the closing bell.  The IRCTC IPO was subscribed nearly 112 times on the last day of the book-building process on October 3, making it the most successful IPO by a public sector enterprise. It was also the most successful IPO in over 20 months.