India’s top railway e-ticketing company recouped most of its losses after a record plunge of 30% as the government canceled its proposal to share half of the state-run company’s convenience fee revenue.
Shares of Indian Railway Catering and Tourism Corp. closed 7.4% lower in Mumbai after a choppy session. The decision to withdraw the proposal was taken after a request by the company, according to a copy of the railway ministry’s communication filed by IRCTC to top stock exchanges.
Some other state-run companies fell. Potential divestment candidates Container Corp. and Bharat Petroleum Corp. both closed 0.7% lower after dropping as much as 3.9% and 1.7% respectively.
The uncertainty related to IRCTC can weigh on investors’ faith in Prime Minister Narendra Modi’s reform agenda, including his plans to divest national assets and carry out an initial public offering of insurance giant Life Insurance Corp. of India.
The government is not taking into account “interest of investors while taking business decisions,” said Deven Choksey, a strategist at KRChoksey Investment Managers Pvt. in Mumbai. “They will invariably kill the wealth before creating it.”
While the stock has lost about 28% of its value from a record high earlier this month, it is still up more than 900% since its market debut in October 2019 mainly because of its monopoly of online rail ticket bookings. The market value of IRCTC, which is not yet part of the MSCI India Index, was $9.77 billion at Thursday’s close, more than that of many members of the gauge, according to data compiled by Bloomberg.
