IRFC Buy or Sell? Trading Insight, Fundamental & Technical Analysis for Next Quarter

In this article, we will discuss

• About Indian Railway Finance Corporation Ltd
• Recent developments
• IRFC: Trading Insights
• IRFC: Financial Performance
• Conclusion
• FAQs

IRFC (Indian Railway Finance Corp Ltd) is a PSU under the administrative control of the Ministry of Railways, Government of India. It primarily falls in the financial service industry and it sources funds for acquisitions, asset creation and modernisation of the Indian Railways.

As of February 2 2024, the IRFC share price is ₹168.95. Should you buy or sell IRFC? Here in this article, we will delve into insights on trading, along with a closer look at the fundamental and technical aspects of IRFC. Hopefully, it will provide guidance for making an informed decision.

About Indian Railway Finance Corporation Ltd

Indian Railway Finance Corp Ltd or IRFC is a public sector company functional under the Ministry of Railways, GOI. It was established in 1986 for the purpose of sourcing funds from overseas and domestic markets to meet the requirements of railway infrastructure in India.

It operates as a financing entity of the Ministry of Railways in India. It uses a diverse set of financial instruments such as taxable bonds, short-term loans, institutional finance and external commercial borrowings. It also leverages equity, long-term rupee loans, free reserves, and tax-free bonds for funding. Furthermore, it extends leasing options for financing both rolling stock assets and railway project assets.

The company has sourced capital for the acquisition of over 2.5 lakh freight wagons, over 73 thousand passenger coaches and 13 thousand plus locomotives. It is focussed on supporting and funding the modernisation, and upgradation of the entire infrastructure of Indian railways.

Recent Developments

Recently Indian Railway Finance Corporation (IRFC) has crossed a remarkable milestone, as its market capitalisation exceeded ₹2 lakh crore. This milestone makes IRFC the ninth Indian public sector undertaking (PSU) firm to reach such heights. In the last 10 months, the IRFC stock price has shown an impressive upward trend, with a remarkable growth of 495%. It began at ₹26.60 per share and reached ₹170 per share by the end of January 2024.

The company reached a market capitalization of ₹1 lakh crore in September 2023 and only took four months to achieve the next ₹1 lakh crore milestone. This rapid progress is due to its winning streak in its shares in the market.

This stock has gone up by a significant 76.3%, which is the largest monthly increase since it was first listed on the stock exchange. The IRFC share price was listed at ₹24.90 per share, and it has now grown by 538.55%.

In the last quarter (q3 2023-24), the company announced an interim dividend amounting to ₹0.80 per share valued at ₹10 at face value. The stock's dividend yield is 0.93.

IRFC: Trading Insights

Indian Railway Finance Corporation (IRFC) stock has witnessed the highest mark of ₹192.80 and the lowest mark of ₹25.40 in the last 52 weeks i.e. in 1 year. Also, it has experienced an all-high of ₹192.80 during this time.

As of writing this article, the current price-to-earnings ratio of this stock is 36.65 while the industry PE ratio is 25.75, which means it is slightly overpriced at the moment.

According to experts and analysts, railway stocks are expected to soar much further after the 2024 Interim Budget, which announced increased capital expenditure for India’s railways. Furthermore, factors like improvement of major stations, increase in FDI and growth in passenger demand are adding to the momentum of railway stocks like IRFC.

It is expected that the IRFC share price will reach ₹200. Experts recommend a stop-loss at Rs. 134. It’s crucial for all investors to remember that any investment carries risk and it’s best to consult an expert for large investments. Having a stop-loss is also essential for investors.

IRFC: Financial Performance

Over the years, Indian Railway Finance Corporation has demonstrated a robust financial performance which has helped it secure funds at competitive rates helping the company to maintain a lower cost of borrowing.

Also, a close partnership with the Ministry of Railways has helped IRFC keep a low-risk status. In the first half of FY 2023-24, the company's revenue increased by 17.56% compared to the previous year, reaching ₹47,683.95 crore, and profit for this period was ₹3,106.45 crore. This growth was supported by keeping lower administrative and overhead costs and by maintaining higher operational efficiency.

Moreover, the company follows a business model that is both low-risk and cost-effective, contributing to IRFC having no Gross Non-Performing Assets (GNPA). In the quarter, the company maintained low administrative and overhead costs along with higher operational efficiency. Furthermore, IRFC doesn't have to pay taxes because it is exempted from the Reserve Bank of India's asset classification regulations, exposure regulations and provisioning regulations.

Conclusion

As we have learned, the Indian Railway Finance Corporation (IRFC) is a specialised financing division of Indian Railways responsible for raising funds for acquisitions and asset management. In recent years, the company has seen significant progress in both its operations and financial results. It holds a positive outlook due to government support in the sector.

According to experts, railway stocks are expected to surge ahead now that the Interim Budget has been announced. Indian Railway Finance Corporation (IRFC) will be no exception, it is expected that the IRFC share price can even reach the ₹200 mark in the near future.

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Frequently Asked Questions

• What is the IRFC quarterly result for 2023?

Ans. In its financial statements for the 2nd quarter, IRFC reported a total income of ₹6,767.48 crore which is 1.29% up from the previous quarter's total income and 16.47% from the same quarter of last year.

• What is the market capitalization of IRFC?

Ans. The current market capitalisation of the company is ₹2,22,230 crore.

• How to do a quick fundamental analysis of the IRFC stock?

Ans. Fundamental analysis involves a long procedure and cannot be done in a couple of steps. But here are some of the key metrics we can check for IRFC- PE ratio: which is 36.65, Earning per share (EPS): which is 4.64, Price to Book value ratio: which is 4.66, debt to equity ratio: which is 8.52.

• Are IRFC shares overvalued? 

Ans. In the base case scenario, the intrinsic value of a single IRFC share is ₹89.93. This indicates an overvaluation of 47% when compared to the current IRFC share price, which is ₹168.95.

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