IRCTC, the tourism and catering arm of Indian Railways, has announced a stock-split in the ratio of 1:5 "to help enhance liquidity in the capital market, widen shareholder base and make the shares affordable to small investors." One IRCTC share with a face value of Rs 10 will be split into 5 shares of face value of Rs 2 each.
"The board of IRCTC today recommended the proposal for sub-division or split of company's one equity share of face value of Rs 10 each into five equity shares of face value of Rs 2 each, IRCTC said in a regulatory filing to the stock exchanges."
The decision on the stock-split is subject to the approval of Ministry of Railways, shareholders and other approvals. The process is likely to be completed within three months from the date of receipt of approval from the Ministry of Railways, IRCTC said.
A company's authorised share capital remains the same in a stock-split, but the market price declines in proportion to the split ratio and this results in a greater number of shares available in the secondary market. The reduction of the market price and increase in liquidity makes the shares affordable to retail buyers.
Meanwhile, IRCTC announced turnaround results for the June quarter, reporting a net profit of Rs 82 crore for the quarter as against a loss of Rs 24 crore in the year-ago period.
IRCTC shares surged to a new high of Rs 2,727 on the BSE post the share split announcement. At 3:10 pm, the shares were trading at Rs 2688, up 4.5 per cent on the BSE.
IRCTC provides catering services, online railway tickets and packaged drinking water at railway stations and trains across India. The government holds 67.40 per cent stake in the company.