Shares of Indian Railway Catering and Tourism Corporation (IRCTC) surged over 6 per cent and hit a 52-week high on the stock exchanges on Thursday after the company announced a stock split and reported a profit in the first quarter of financial year (FY21).
The scrip surged 6.08 per cent to hit a 52-week high of Rs 2,727.95 on the BSE while on the National Stock Exchange (NSE), it rallied 6.09 per cent to Rs 2,728.85 during the intraday trade. It eventually settled at Rs 2,694.95 on the NSE, up 4.77 per cent and at Rs 2689.85 on the BSE, up 4.60 per cent.
The e-ticketing and catering arm of the Indian Railways announced a split of one equity share of the face value of Rs 10 into five equity shares of the face value of Rs 2. The board approved this proposal in an earnings call.
The same has to be approved by the Ministry of Railways and shareholders, the company informed in a filing to the stock exchanges.
“Recommended the proposal for sub-division of Company’s one (1) equity share of face value of Rs 10/- each into five (5) equity shares of face value of Rs 2/- each, subject to the approval of Ministry of Railways, shareholders and other approvals as may be required,” IRCTC said in a BSE filing.
IRCTC said that the stock split is proposed for two reasons:
1. To comply with the Guidelines on Capital Restructuring of Central Public Sector Enterprises issued by the Department of lnvestment & Public Asset Management (DIPAM), Ministry of Finance;
2. To enhance the liquidity in the capital market, to widen the shareholder base and to make the shares affordable to small investors.
The process may take three months to complete after receiving the necessary approvals from the Ministry of Railways.
While there will be no change in the share capital, the number of shares will increase 5 times.
Additionally, the company also reported a profit of Rs 82.52 crore for the quarter ended June, compared to a loss of Rs 24.60 crore in the corresponding period year-ago.