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Writer's pictureAnkit Malviya

IRFC stock rises 9% to reach a new all-time high, hitting a fresh record mark.


IRFC shares surge 9% to scale fresh record high; detailed article on this topic


Indian Railway Finance Corporation (IRFC) shares soared 9% on Tuesday to hit a new all-time high of Rs 28.65 on the BSE. The stock has rallied 36% in the past month, outperforming the benchmark Sensex, which gained 7% in the same period. IRFC is the dedicated market borrowing arm of the Indian Railways. It raises funds from capital markets and through borrowing for financing the acquisition of rolling stock assets, which are then leased to the Indian Railways.


The company reported a strong performance in the first quarter of fiscal year 2022, with its net profit rising 126% year-on-year to Rs 1,483 crore, driven by higher revenues and lower finance costs. Its total income increased 42% to Rs 4,416 crore, while its finance costs declined 9% to Rs 2,056 crore. The company's asset under management (AUM) grew 23% to Rs 3.39 lakh crore as of June 30, 2021.


IRFC has a diversified funding mix, comprising long-term bonds, taxable and tax-free bonds, term loans from banks and financial institutions, external commercial borrowings and short-term borrowings. The company enjoys the highest credit ratings from domestic and international rating agencies, reflecting its strong linkages with the Indian Railways and the government of India. The company also benefits from its low-cost borrowing, competitive pricing and efficient asset-liability management.


Analysts are bullish on IRFC's growth prospects, given its monopoly position in financing the Indian Railways' capex plans, its stable and predictable earnings profile, its healthy asset quality and its attractive valuations. According to Bloomberg data, IRFC is trading at a price-to-earnings ratio of 8.6 times its estimated earnings for fiscal year 2022, compared to its peer Power Finance Corporation, which is trading at 9.4 times. The consensus target price for IRFC is Rs 31.6, implying a potential upside of 10% from the current levels.


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