Irfc Share Price

About IRFC (Indian Railway Financial Corporation)

The company was incorporated on 12th December, 1986 by the Ministry of Railways and the Government of India as a Schedule ‘A’ Public Sector Company. The main workings of the company was to be the financing arm of the Indian Railways Sector to help mobilise all funds from both domestic and overseas capital markets and provide for procurement of locomotives, passenger coaches, wagons and other assets. IRFC is also registered as a NBFC - ND-SI (Systematically Important Non-Deposit taking Non-Banking Financial Company and NBFC - IFC (Infrastructure Finance Company) with RBI (Reserve Bank of India)

In the over 30 years of existence, the company has fully supported the growth and expansion of the Indian Railways sector and related entities. The main aim is to meet the predominant portion of ‘Extra Budgetary Resources’ (EBR) requirement of the Indian Railways. They do this through market borrowings at the most optimum rates.  As of FY2020, the company had already financed Rs. 71,392 crores to the Indian Rail Sector. This accounts for 48.22% of the railway capital expenditure.

Apart from financing the MoR, IRFC has also been providing loans to Rail Vikas Nigam Limited (RVNL), Railtel, Pipavav Railway Corporation Limited (PRCL), Konkan Railway Corporation Limited (KRCL) and more.

Core Activities & Products

1. Leasing: The leasing model is followed by IRFC to finance the rolling stock assets as well as project assets of the Indian Railways Sector. With a primary component of 15 years followed through by a secondary component of 15 years, the lease period is typically 30 years. Once the lease is released, a recovery of the principal amount as well as the interest levied is affected during the first 15 years period and at the end of the lease, the assets are sold typically to the MoR for a marginal price. IRFC has adopted an arrangement of cost plus lease with the Ministry of Railways that ensures a net interest margin for them. The lease rentals are paid by MoR on a half yearly basis which includes both principal and interest.

2. Lending: IRFC has lent funds to various companies in the Railway sector like Rail Vikas Nigam Limited (RVNL), Konkan Railway Corporation Limited, Railtel Corporation of India, Rail Land Development Authority & Pipavav Railway Corporation Limited. This lending business began in 2011 - 12 and has since accelerated the project execution on various fronts, one of which is capacity enhancement. An additional task of funding Railway Projects through Institutional Finance up to Rs. 1.5 Lakh Crores has been handed to the company in 2019 - 20.

3. Borrowing: To meet all of its funding requirements, IRFC has various sources to extract the most optimal pricing possible from the markets. Apart from the equity infusion from time to time by the Indian Government, the company has been mobilising funds through both tax free as well as taxable bond issuances, term loans from banks & FIs and ECBs. This funding plan is carried out with the main objective to minimise its cost of borrowing funds and benefit the Indian Railways, which works on the basis of cost plus margins.

Board of Directors

1. Chairman & Managing Director: Sh. Amitabh Banerjee

2. Director (Finance) & Chief Financial Officer: Smt. Shelly Verma

3. Nominee Director: Sh. Baldeo Purushartha

4. Nominee Director: Sh. Bhaskar Choradia

5. Non-official Independent Director: Sh. Vallabhbhai Maneklal Patel

6. Non-official Independent Director: Smt. Sheela Pandit

Key Executives

1. Chairman & Managing Director: Sh. Amitabh Banerjee

2. General Manager (Finance): Sh. N. H. Kannan

3. Additional General Manager (Finance): Sh. A. Samantaray

4. Jt. General Manager (HRM): Sh. Rahul Kumar Maurya

5. Jt. General Manager (Law) & CS: Sh. Vijay Shirode

Presence

Indian Railway Finance Corporation Limited

CIN – L65910DL1986GOI026363

Room Nos. 1316 – 1349, 3rd Floor,

Hotel The Ashok, Diplomatic Enclave, 50-B,

Chanakyapuri, New Delhi 110021

Phone : +91 011-24100385

Fax : +91 011-24100388

info@irfc.nic.in

Website: https://irfc.co.in/

Strengths:

1. Strategy: IRFC plays a very strategic role in the financial growth and expansion of the Indian Railways. It has regular demand for loans and that is very favorable for its asset growth. Over the last three years, IRFC assets have grown at a CAGR of 22% from 1,20,000 crores (FY2017) to 2,66,000 crores (FY2020).

2. Low Borrowing Cost: IRFC belongs to the Government of Indian and lends to their owned entities. The cost of borrowing is very low. Over the last three years, the cost of borrowing has only been 6.74% to 7.25%.

3. Consistent performance: IRFC has a cost-plus model of working wherein they charge a fixed rate of interest for sourcing loans to MoR. This is fixed at 0.3 - 0.4% over the cost of borrowing. This means an annual returns of 10 - 12% on equity.

CSR and Sustainability

The CSR and Sustainability Policy of IRFC was framed with broad policy guidelines of the Government of India and addresses social, economic as well as environmental concerns of the country. The sustainable mission of the company is to promote clean, green, educated & a capable India.

IRFC has always been at the forefront on achieving larger social goals with their significant contribution to society in a sustainable manner over the last five years. Here are some of the areas of work that has been put in.

1. Development of infrastructure, revamping of already existing facilities as well as supplying of medical equipment for Barangar Municipality Hospital, Kolkata.

2. Some part funding in the school building construction, furniture supply, computers and other tech, etc. at Wazirpur, Gurgaon.

3. Distribution of aids and appliances to the disable people at Beed, Maharashtra, Lucknow, Indore, Haridwar and Rishikesh.

4. Help in setting up solar photovoltaic systems, provision of solar lanterns and solar powered street lights in villages across India, with recent ones in Assam, Ladakh and Kargil.

5. Solar power plant set up at various railway stations across India like Ajmer, Rajasthan.

6. Development of waste water management plants at various railway stations across India like NDLS, New Delhi.

7. Rain water harvesting plants at all major railways stations of Delhi.

Criticism

IRFC has seen some criticism over its years of tenure. Their growth has been consistent but with less yield as compared to expectation. Hence, if the company gets more loan demands, it will have to raise equity capital more frequently from the market as the RoE is inadequate. Also, the exposure to Government of India entities at optimum rates puts a cap on the RoE to cost capital.

COVID-19 Impact

The Covid 19 pandemic caused a delay in the release of the IRFC IPOs. This set a downward spiral of the bourses. Being a company that raises funds from the public sector, this was a major setback. Stock markets in India as well as across the world saw a meltdown as the pandemic started. However, the market stabilised quickly and the IPOs were released. The profits were good but the yield was not very high.

Future Prospects

Being a public enterprise supported by the Government of India, IRFC does not have much competition in the market and is the biggest finance providers in the railways sector. As the railway sector rises, bringing in global tourists, the IRFC has a bright future.

Did You Know!

What many investors do not know is that the IRFC IPO was the first public offering of the calendar year, launched in January and also was the first to launch by an Non-Banking Financial Corporation (NBFC) in the public sector. Also, another interesting fact is that it is wholly owned by the Government of India. Given it’s gradual growth and consistent profits, the company has a low risk profile. This company is a good long term investment as per most financial advisors and investors and is exempted by RBI from asset classification norms, while the gross NPAs are nil and has always been.

Initial Public Offering

The IPO of IRFC was released on 18th January, 2021, where the base IRFC share price was set at Rs. 25 and Rs. 26 per share. The face value per IRFC stock price was Rs. 10 while the lot size was 575 shares. The issue size of shares of Rs. 10 was 1,782,069,000 shares which aggregates to Rs. 4633.38 crores and these were all offered for sale. This IPO was released both on NSE and BSE. The RoE was 11.6%. It was promoted by the President of India acting through the Ministry of Railways. Overall, the IPO had limited success in spite of high earnings and yields. One of the reasons contributed to this was the issue size being so big, making the price movement slow. The best way to make better returns and higher yields is to invest in the shares for a long term period. The company finances and the fact that it is government owned makes it a stable bet for the years that are to follow.

Equity Shares

Investors believe that IRFC equity shares will bring in higher returns as compared to FDs. IRFC share prices are bound to be profitable as the company not only has revenue but is making consistent profits. Also, the Earnings Per Share are growing by 9.9% consistently over the past three years. They have also maintained stable EBIT (Earnings Before Interests and Taxes) margins, all while growing the revenue 67% to Rs. 62 billion, all over the last year.

IRFC equity shares are available on the NSE & BSE where they were listed in 2021. In 2021, when the IRFC shares were launched, the initial offering was followed by the Government of India reducing their holdings to 86.36%, while the remaining shares were made available to public trading.

Annual Financial Summary