IRCTC rallies 15% as scrip turns ex-stock split in 1:5

Shares of Indian Railway Catering and Tourism Corporation (IRCTC) rallied 15 per cent to Rs 949.65 on the BSE in Thursday's intra-day trade after the scrip turned ex-stock split (sub-division of equity shares) in ratio of 1:5.

The stock of IRCTC had hit a record high of Rs 1,279 (adjusted to stock split) on October 19, 2021. In the past three months, it has zoomed 105 per cent, as against a 16 per cent gain the S&P BSE Sensex.

IRCTC has fixed Friday, October 29, as the record date to ascertain the name of shareholders entitled to the subdivision/split of equity shares of Rs 10 each into five equity shares at a face value of Rs 2 each. The board of IRCTC had approved a stock split on August 12.

The rationale behind the stock split is to facilitate larger shareholder base, to increase the liquidity and to make the shares more affordable to investors.

A stock split is generally undertaken to make the stock more affordable to small retail investors and increase liquidity. It refers to splitting the face value of shares, in which the number of shares of the company increases but the m-cap stays the same. Existing shares split, but the underlying value remains unchanged. As the number of shares increases, the price per share goes down.

At 09:44 am, IRCTC was trading 12 per cent higher at Rs 921.20 on the BSE, as compared to a 0.64 per cent decline in the S&P BSE Sensex. A combined around 15 million equity shares had changed hands on the counter on the NSE and BSE.

Besides IRCTC, three other stocks turned ex-stock split today. R&D Denim turned ex-stock split in the ratio of 1:5; Indo-National’s board approved sub-division of face value of equity shares from Rs 10 to Rs 5 each; while Raghuvir Synthetics’ board approved stock split from Rs 10 to Re 1.