The ongoing bull market is consistently showing that the old adage may have to be resigned to the past just like the open outcry method of trading. One glaring example where retail investors have turned the tables on their “better informed” institutional investors is Indian Railway Catering and Transportation Corporation (
).
Shares of the online railway ticketing platform have skyrocketed 175 per cent since the beginning of the September quarter, as the reopening of the economy improved outlook for the ticketing business. The optimism was supported by the fact that railway bookings in the September quarter were likely up 100 per cent as compared to the year ago period.
“IRCTC is a pure monopoly business in 2 out of its 4 operating segments, namely Internet Ticketing and Rail Neer,” brokerage firm Dalal & Broacha Stock Broking said in a recent report.
Much of the enthusiasm for IRCTC over the past year has also been driven by the fact that it is an Internet platform business that deserves the same, if not better, valuations than loss-making online platforms like Zomato and CarTrade Tech.
What is unique about this move in the IRCTC shares since July is the fact that retail investors have been the driving force and have captured all the gains whereas institutional investors caught the exit bus on what can only be described as ultra-conservatism.
In the quarter ended September, retail holding in IRCTC grew by 291 basis points to 14.17 per cent. At the same time, both mutual funds and foreign investors turned net sellers on the counter. The stake of mutual funds fell by 250 bps to 4.78 per cent whereas that of FPIs declined by 26 bps to 7.81 per cent.
“There are new kids on the Street. They want to go to the penthouse, they are not going to get there, buying old stocks. So, they are going to buy riskier, emerging companies. It is a big potent force. Do not underestimate its power,” Shankar Sharma, vice-chairman and joint managing director at First Global told ETNow in a recent interview.
