 "Train, IRFC, Railways")
Shares of Indian Railway Finance Corporation (IRFC) surged 8 per cent to hit a new high of Rs 48.29 on the BSE in Friday’s intra-day trade on stable outlook.
In the past one week, the stock of state-owned financial institution company has rallied 38 per cent, as against nearly 1 per cent decline in the S&P BSE Sensex.
IRFC’s principal business is to borrow funds from commercial markets to finance acquisition of new rolling stock and construction of developmental projects or infrastructure for Indian Railways.
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IRFC has played a significant role in supporting the expansion of the Indian Railways and related-entities by financing a significant proportion of its annual plan outlay.
In the prior week, IRFC had signed a Memorandum of Understanding (MoU) with RITES to strengthen cooperation in financing & development of Railway Infrastructure Projects.
The MoU aims to identify mutual areas of collaboration with IRFC’s to provide financial assistance to projects/ institutions that have backward and or forward linkages with Railways.
Meanwhile, in May, the board of IRFC approved to raise funds up to Rs 50,000 crore through a prudent mix from the domestic markets / offshore markets to meet funding requirement of Indian Railways, if any.
The board has also accorded in-principle approval for finance lease of 20 BOER Rakes to NTPC on a Finance Lease model for an estimated amount of Rs 500 crore under General Purpose Wagon Investment Scheme (GPWIS) of MOR.
The board also received an in-principle approval for term loan for Haryana Orbital Rail Corridor (HORC), a railway line from Palwal to Sonipat, being promoted by Haryana Rail Infrastructure Development Corporation Limited (HRIDC) (a JV of Government of Haryana (GoH) and MoR).
IRFC’s disbursement to MoR was Rs 32,337.77 crore in FY23, as against Rs 59,899 crore in FY22 and Rs 1,04,369 crore in FY21. The government as part of the Union Budget for 2023-24 has allocated negligible extra budgetary resources for Indian Railways, indicating it will not look to borrow money to fund its capital expenditure.
Further, IRFC plans to diversify by funding any entity, which has forward or backward linkage with the Indian Railways.
The company, therefore, is in the process of establishing systems and processes for the same, said analysts at CARE Ratings, sharing a 'stable' outlook on the counter.
"The 'stable' outlook reflects expectations that the company will continue to receive timely funding from the government through favourable lease agreement, owing to its strategic role as a dedicated funding arm of Indian Railways," the rating agency said.
