Remember those summer vacations and going to the grandparents’ house by train. How exciting was it, nor was the journey of going by train seat together in the train of the whole family. Fighting with your siblings for the window seat and how much Indian Railways is not just a medium of transport but is the identity of our country.
IRCTC is the fourth and largest rail network in the world, where more than 13 lakh employees are working today.
Today this network is connecting every corner of India but there is a big problem and that problem is that IRCTC is a business and business never runs on charity.
There was a time when people invested in IRCTC And IRCTC was a money-making machine for the people who invested in IRCTC
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What Was The Irctc ipo listing price? IRCTC IPO date and IRCTC IPO Price ?
October 14, 2019 IPO Opens of IRCTC whose issue price is Rs.320. But do you know how much this share was listed?
Irctc ipo listing price 838 Rs. on that is, every investor will get a gain of 170%, but how?? And if so, then today the price of this share is 590 rupees. But why?
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A Brief History of the Indian Railways
This story begins in those days when the British had the rule over our country.17 August 1849, it was the day when the Britishers decided that the Indian Railway would be constructed. When the Britishers came to India, their first motive was trade and profit. But due to the lack of a good transportation network inside India, they used to have difficulty moving goods from one place to another. And as result he started his first train RedHill Railway At that time, the train was built by a man named Arthur Cotton for transport granite since then, Indian Railways has been giving its service to all of us tirelessly today without stopping. The Britishers had made the railway system for their benefit, but as of today’s date, we Indians are taking the most advantage of it. Those people went and did some good things. But Interestingly IRCTC is not a loss making company like zomato and Paytm and there is no competition of IRCTC.
How IRCTC Generates Revenue
IRCTC mainly earns money in these 4 ways
- No.1 online ticket booking IRCTC gets money from all the tickets booked online.
- No.2 Foodservice inside railway and food service at railway station IRCTC earns money from both these things.
- No.3 Which is a water surve inside the railway and which is a water surve at the railway station it means Rail neer You must have often seen that IRCTC earns money even from some things.
- No.4 and last special tourism services IRCTC gives such special tourism services in many places, they give such packages. Which are also very expensive and are also very estranged. IRCTC earns a lot of money from that too.
What Caused the Correction in IRCTC Share Price?
IRCTC’s stock hit its all-time high in October 2021 After which there has been a correction of 53% in the share price. That is, even the investors had invested their money inside IRCTC. Their investment has been half From January 2022 till date, the share price of IRCTC has fallen by 19.2%.
But why is this happening, and why are people wasting their money?
If you look carefully IRCTC did a business of 777 crores in the year 2021 only from its online ticketing business. Which flared up in 2022, which has not even finished the whole year 1879 has reached the cross in it. And not only this, the business of 67.38 crores received from caterine has increased 4 times to 266.19 crores. And if we talk about 3rd revenue stream of Irktaka which is: Railway’s water also its revenue. From 27.80 crores, parts have reached 51.88 crores. It means approximately double.
But the question is? If the revenue is doubling then why are all these investors in such terrible losses?
In the year 2020, something like the covid pandemic shook the whole world. shops, Malls, and Flights all were closed If there is one thing that has the most impact in covid, then it is the hospitality industry Belonging to the Hospitality Industry, IRCTC which was going to be ruined in a very bad way in 2020.
Coming to the year 2021, from June to October, in these months, IRCTC gave returns of 216% to all its investors. But How?
Well, one reason is monopoly. But I know what you guys are thinking. After all this can not happen a bit according to the Competition 2002 Act, No company can abuse its power in any market. So if this is the case then why does the IRCTC monopoly exist at all? Well to understand this you have to understand the types of monopolies So in very simple words market, there are two types of monopolies.
No.1 Established Monopoly This is the monopoly in which everything is a market-driven Particular product or any particular company by putting its maximum capacity Dominating that particular market due to its competitive advantage That is, for example, a company has a good dominant market share of that entire market on its own. So we can call it an established monopoly something like JIO- TELECOM INDUSTRY and ASIAN PAINTS- PAINT BUSINESS and AMAZON – E-Commerce also.
After that comes the 2nd form of monopoly which is regulated monopoly. It is a monopoly that does not have any significant competitive advantage or any very strong business value proposition. Regulated monopolies exist in any monopoly because they are supported by the government. Because if you look inside the real world, if you don’t have any competitive advantage then you can barely exist. But today’s date, many regulated monopolies exist because they have government backing. And not only that, genes run government regulated monopolies within the gene sector. Within those sectors, the government establishes such rules. That no private player can enter that industry The result of which is that all regulated monopolies are incomparable. So even if any regulated monopolistic company is performing dirty, then you will not see its poor performance from above. Because you can not do clothes from any other company for its performance.
By comparing the performance of both Airtel and Jio in the written private sector, you can tell which company is performing well. But not the case in IRCTC if because it’s a regulated monopoly you can not compare IRCTC with any company so intern if IRCTC perform in any way you will always realize it’s performing good because you don’t have anything to compare.
So till October 2021 IRCTC was performing very well Or I can say that people were seeing that the IRCTC is performing very well. But then suddenly something happens. After October 2021, the IRCTC success train catches the opposite train. 20 October 2021, news comes that the railway ministry will retain 50% of the revenue earned by IRCTC. As soon as the news came, reverse circuits started appearing on IRCTC Shares fell 25% within a day There were frequent lower circuits and the situation had become so bad that also has to stop trading also But the bigger and more regrettable thing is that after the Shish event, the share price of IRCTC never came back to its old position. And also, even today the price of the share is continuously falling. And investors are losing their money. The Indian government had taken this decision to recover Rs 300 crore from IRCTC But seeing such a severe fall in the share price and seeing so much panic selling inside the market. The government was forced to withdraw its decision. But things don’t end here. Things start here Because the story is yet to come due to the government’s decision. Institutional investors have lost their confidence in IRCTC forever. Because they saw that the government can take the risk of shaking such a large market cap of such a big company for a small amount of Rs 300 crores. So anything can happen in the future And as a Result today every institutional investor is trying to withdraw their money from IRCTC. All the institutional investors are going to sell their IRCTC holdings and retail investors are strengthening their positions in the market. That is, the majority stock of IRCTC has come out of the hands of very powerful people and they have reached the hands of very few people. Right now an institutional investor is scared. Every investor is thinking that the Indian government will bring private revenue in future. Or else pay the deduction for the customer care service charges. Reconnaissance can be anything, due to which the revenue of the blood can be shaken in a jiffy.
After covid, all activities related to railways stop. Due to which IRCTC stood very close to ruin. But if we see today’s situation, then there is no one reason behind the fall in the price of the shares of the people.
There are a couple of things: After the war of Russia and Ukraine, foreign institutional investors have withdrawn an amount of more than 2 lakh crores from the market. Due to which today the private sector unit of our country is Panic selling is going on in all those stocks at the moment And whenever there is a lot of panic selling inside the market, then the share price goes down. So these people have also invested in IRCTC: they are also losing their money continuously. There is no direct relation from the Russian-Ukraine war but because of shish jung inside the whole world. The cost of the raw materials that he has inside the transport industry has increased. The rate of metal has touched the sky at this time Many companies in our countries are getting worried day and night about their production cost.
There was a war between Russia and Ukraine, thousands of people were saying what should we do?
But let me tell you, if there is a fire in your neighborhood, it can’t be like this, you can stay silent,and that is also happening with IRCTC. One more thing: If it doesn’t happen then IRCTC may be ruined for us. And that is the Russia-Ukraine war. The more it continues, the more the presence of crude oil in this world will continue to increase. And assas the result whenever the price of crude oil increases, inflation increases all over the world. Because crude oil does all the transportation due to the major thing: fish oil. And when transportation will be expensive, obviously the final product will also increase.
And now the most powerful lesson that we investors can learn from this case study and implement in our investor journey. well only one thing and that is scanning the environment before investing There is no business in this world that is not affected by its environment. beat any industry Any incident that happened inside each industry affects the rest of the industry in some way or the other. Giving a simple example, just in the last few days, the market revenue of all the companies has fallen by 50%: This is because at this time startups are firing a lot of employees to cover their cost. And if they have to cut their costs, then first of all they also have to cut costs. So there comes a big change in marketing expenses. Startups are spending very little money on marketing. There are other marketing companies, their revenue is falling.
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