NEW DELHI: The Ministry of Railways has withdrawn its decision to share the revenue earned from convenience fee collected by Indian Railways Catering and Tourism Corporation (IRCTC) in the ratio of 50:50 from November 1.
This decision came after shares of the IRCTC fell as much as 29% to hit an intraday low of Rs 650.10 on the BSE.
The big fall came after the publically listed company had informed exchanges that Ministry of Railway asked it to share half of all the convenience fee revenue it earns.
Post this withdrawal, share of IRCTC gained from its intraday low and was 5% lower (at 11.38 am) than Thursday's closing.
Many analysts called the move to share IRCTC's convenience fee a negative for its shareholders.
Santosh Meena, Head of Research, Swastika Investmart, on Friday morning said that this would lead to an accident in the share of IRCTC but also pull the chain of momentum in the other PSU stocks.
"The sentiments were improving for PSU stocks after a positive attitude by the government but this news may hurt the sentiment badly," added Meena.
IRCTC is the only company tasked with managing food services on trains and has a monopoly in the online ticketing and catering services for the Indian Railways.
ITC's stock has been one of them best performing equities on Indian exchanges this year. However in recent sessions, it has witnessed a sharp correction.
Despite this correction, IRCTC shares gained over 11% on Thursday after it started trading ex-stock split.
Starting Thursday, IRCTC shares were split in the ratio of 1:5, sub-dividing the face value of share from Rs 10 per share to Rs 2 per share.