IRFC zooms 28% in 2 days on heavy volumes; market-cap hits Rs 80,000 crore

Shares of state run financier Indian Railway Finance Corporation (IRFC) hit a record high of Rs 64.50, nearly doubled since July, from the level of Rs 32.35 on the BSE.

Shares of state run financier Indian Railway Finance Corporation (IRFC) hit a record high of Rs 64.50, as they rallied 14 per cent on the BSE in Monday’s intra-day trade on heavy volumes. In past two trading days, it zoomed 28 per cent.

Till 09:38 AM, a combined 160 million equity shares, representing nearly 1 per cent of total equity of IRFC, had changed hands on the NSE and BSE. In comparison, the S&P BSE Sensex was up 0.16 per cent at 65,493.

Since July, the stock price of IRFC has nearly doubled from level of Rs 32.35. A sharp rise in the stock price of IRFC has helped the company surpass it market capitalisation over Rs 80,000 crore. Currently, IRFC with Rs 83,599 crore m-cap stood at 68th position in overall ranking.
 

The company's principal business is to borrow funds from financial markets to finance the acquisition/creation of rolling stock / project assets, which are then leased out to the Indian Railways as a finance lease. IRFC is a Schedule ‘A’ Public Sector Enterprise under the administrative control of the Ministry of Railways (MoR).

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.

Business outlook

The outlook for IRFC in FY 2023-24 is centred around strengthening its robust business model and fostering a strong relationship with the MoR. Over the years, the company has witnessed substantial growth in its business with the MoR with the cumulative funding to the railway sector crossing the Rs 5.50 trillion mark with Assets Under Management reaching Rs 4.66 trillion at the end of March 2023.

On July 27, IRFC 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.

Company has also signed a Memorandum of Understanding (MoU) with India Infrastructure Finance Company Ltd. (IIFCL), a Public Sector Enterprise under the Ministry of Finance, to strengthen cooperation in financing railway infrastructure projects with forward and backward linkages to Railways sector.

In line with India's focus on infrastructure spending to reach its target GDP of USD 5 trillion by FY25, IRFC is committed to raising funds from the financial market at the most competitive rates and terms. The government's National Infrastructure Pipeline (NIP) and PM Gatishakti initiative lay the groundwork for comprehensive and integrated infrastructure development in the country.

IRFC, as a premier financial institution with a track record of NIL NPA and capability to mobilize large funds from both domestic and offshore markets can play a significant role in supporting India's infrastructure sector, driving economic development and growth, the company said in its FY23 annual report.

Meanwhile, the government owns 86.36 per cent of the Indian Railways' funding arm. Last month, Reuters report suggested that the government is looking to partially sell its stake in the firm via on offer for sale (OFS). The sale would also allow the government to adher to SEBI-mandated minimum public shareholding norms, which require that public companies maintain at least 25 per cent public shareholding.