IRCTC shares plummet as Indian Railways cuts advance reservation period
Shares of the Indian Railway Catering and Tourism Corporation (IRCTC) plummeted after the Indian Railways decided to cut the advance reservation period for bookings. The new policy, which will come into effect from November 1, will reduce this period from 120 days to merely 60 days. However, all existing reservations made till October 31 under the earlier 120-day Advance Reservation Period (ARP) will remain valid.
Impact on revenue and market performance
The change in reservation policy is seen as a possible setback for IRCTC, which earns nearly 80-85% of its revenue from online bookings. Analysts believe a shorter advance booking period could mean lower earnings for the corporation. As of 3:30pm today, IRCTC shares were trading at ₹870.9 on the NSE, down 2.43% from yesterday's closing price.
Exceptions to the new reservation policy
The railway board's circular also clarified that there will be no changes for trains with an already established lower time limit for advance reservations, like the Taj Express and Gomti Express. Also, international tourists will continue to enjoy a 365-day advance booking period. This means that while the policy shift affects domestic travelers mainly, it doesn't apply universally across all services offered by Indian Railways.
LIC increases stake in IRCTC amid policy change
In related news, Life Insurance Corporation (LIC) recently increased its stake in IRCTC to 9.3%. The firm announced that its holding in the railway sector 'miniratna' PSU has increased by 2.02% between December 16, 2022 and September 11, 2024 via open market purchases. This comes amid the policy change and subsequent drop in IRCTC's share price on the bourses.
