The shares of the Public Sector Enterprise gained up to 3.2 percent after the company signed a Memorandum of Understanding (MOU) with REMC LTD.
With a market capitalization of Rs 2 lakh crore, the shares of Indian Railway Finance Corporation Ltd were trading at Rs 153.40 per share, increasing around 1 percent as compared to the previous closing price of Rs 152.00 apiece.
Reason for rise:-
The shares of the company have seen bullish movement after Indian Railway Finance Corporation Ltd and REMCL, a joint venture of MOR and RITES that facilitates power procurement for Indian Railways, have signed a Memorandum of Understanding (MoU) to work together on financing Renewable Energy (RE) projects granted by REMCL for delivery to Indian Railways.
Furthermore, the collaboration would look into financing possibilities for thermal, nuclear, and renewable power projects built under a captive paradigm through joint ventures with Indian Railways and other companies.
Moreover, this MoU sets the foundation for cooperation between IRFC and REMCL to advance Indian Railways’ goal of minimizing reliance on fossil fuels and achieving net-zero carbon emissions by 2030. The collaboration aims to harness renewable energy sources for the railway sector.
Additionally, for IRFC, this MoU marks a strategic step toward diversifying its business model while maintaining its critical role in developing Indian Railways. The partnership aligns with the government’s vision of delivering world-class, efficient, and environmentally sustainable transportation solutions for the nation.
Financial Analysis
Examining the company’s financial performance, revenue jumped by 2 percent from Rs 6,761 crore in Q2FY24 to Rs 6,900 crore in Q2FY25, and during the same time frame, net profit magnified by 4 percent from Rs 1,545 crore and Rs 1,613 crore.
Financial matric
The company’s debt-to-equity ratio surged to nearly 9 due to rapid asset growth but is stabilizing at 7.5. Despite no new disbursements over six quarters, ongoing projects are sustaining revenue, reflecting a shift towards financial stabilization and continued operational performance.
Future Strategy
The company plans to expand lending beyond railways into logistics and infrastructure, aligning with the national infrastructure pipeline. It is exploring funding with railway-linked entities like NTPC for wagon purchases, leveraging its strong balance sheet to offer competitive funding rates.
Growth Outlook
Management is optimistic about India’s robust 20-year infrastructure growth story. While future disbursement targets remain unspecified, the focus is on quality asset evaluation and maintaining low-risk lending practices to ensure sustainable growth.
Market Positioning
IRFC, with the lowest weighted average cost of capital among peers, aims to reduce it further. The management plans to enter infrastructure financing with competitive lending rates, positioning the company to expand its market share and strengthen its competitive edge.
New Development:-
The company signed a ₹700 crore leasing contract with NTPC for rolling stock, marking its entry into non-railway financing. Management is focused on strengthening its appraisal team to explore and evaluate diverse business opportunities beyond traditional railway financing.
Company Profile:-
Indian Railway Finance Corporation Limited operates through the Leasing and Finance segment. The Company’s principal business is to borrow funds from the financial markets to finance the acquisition/creation of assets, which are leased out to the Indian Railways as finance leases.
Written by:- Abhishek Singh
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses
