Railway ministry seeks share of revenue from IRCTC

Railway ministry seeks share of revenue from IRCTC

Indian Railway Catering and Tourism Corp (IRCTC) share price dropped 25% on October 29 after the railway ministry asked the company to share its revenue earned from convenience fee.
However, the prices have recovered as news of Railway Ministry withdrawing its proposal appeared in electronic media.
The stock hit a low of Rs 650.10 on BSE, taking its fall to 49% from the October 19 high of Rs 1,278.60. But following the latest development, the stock cut losses to trade 5.3% down at Rs 865.15.

The Street expects about 433 million tickets to be sold via IRCTC in FY23 and a 50% convenience fee would have hit Ebit estimates by about 30% for FY23 and FY24.
The convenience fee for IRCTC is seen at Rs 740 crore for FY23 and Rs 780 crore for FY24. Sharing 50% of revenue with MoR would have meant that the EBIT margin of the ticketing division would fall from nearly 85% to roughly 48% in FY23 and FY24.

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