IPO Size

`4,633.4 Cr

Price Band

`25-26 Per Share

Minimum Lot Size

575 Share

Face Value

`10 Per Share

Employee Discount


Retail Allocation


Issue Open Date

18 Jan 21

Issue Close Date

20 Jan 21

Listing Date

29 Jan 21

About the Company:

Backed by the Government of India, Indian Railway Finance Corporation (IRFC) was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets. The primary objective of IRFC is to meet the predominant portion of ‘Extra Budgetary Resources’ (EBR) requirement of the Indian Railways through market borrowings at the most competitive rates and terms. The Company’s principal business therefore is to borrow funds from the financial markets to finance the acquisition / creation of assets which are then leased out to the Indian Railways. IRFC has also been lending to various entities in Railway sector like Rail Vikas Nigam Limited (RVNL), Railtel, Konkan Railway Corporation Limited (KRCL), Pipavav Railway Corporation Limited (PRCL) etc.

Outstanding Litigation:

S.No. 1 - Company 2 - Directors 3 - Promoters
Entity Name By the Company Against the Company By the Director Against the Director By the Promoter Against the Promoter
Criminal cases 0.59 - - - - -
Material civil cases - - - - - -
Taxation matters 14664.47 26,547.13 - - - -
Regulatory Procedings - - - - - -
Amt. (In Million Rs.) 14,665.06 26,547.13 - - - -

Financial Statements:

Income Statement (In Millions.) Mar'20 Mar'19 Mar'18
Interest Earned 27,479.98 17,230.71 9,885.72
Lease Income 1,06,724.27 92,637.69 82,179.06
Other Income 6.65 5.15 13.61
Total Income 1,34,210.90 1,09,873.55 92,078.39
Interest Expended 1,01,626.62 81,830.62 66,375.85
Net Interest Income 32,577.63 28,037.78 25,688.93
Operating expenses 663.32 489.50 383.11
Total Expenses 1,02,289.94 82,320.12 66,758.96
Operating Profit Before Provisions and Contingencies 31,920.96 27,553.43 25,319.43
Taxes - 6,154.10 5,304.83
Net Profit for the Year 31,920.96 21,399.33 20,014.60


As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe for Long Term’. Indian Railway Finance Corporation enjoys healthy credit rating from CRISIL, CARE and ICRA, which is likely to attract investors. The monopoly characteristic of a company which tends to remain for an uncertain period brings premium valuations for the scrip. However, the recognition of the NBFC as a PSU will could dilute the premium. The Indian railway sector is on the verge of turnaround which signals that the potential has not unlocked yet. On financials front, the firm has reported a CAGR of Lease Income and Interest Income at 14% and 66% respectively, which are considered as direct revenues for the firm. Due to higher credit rating, the cost of capital for raising funds will remain lower. At a P/E multiple of 7.6x (considering the FY20 earnings and upper price band), the company is issuing shares at cheaper valuation. Investors should apply for long terms horizon.

Promoter of the Company

The promoter of the company is Government of India through Ministry of Railways.

Peer Comparison

Finance arm of Indian railways enjoys monopoly in the railway segment. All financing requirements of Indian railways right from leasing, expansion and working capital requirements are catered by IRFC. The company is expected not to find any peer in future too.

Objectives of the Issue

Offer for Sale

The object of the Offer for Sale is to allow the shareholders to sell an aggregate of up to 594,023,000 equity Shares held by them. The company will not receive any proceeds from the Offer for Sale. Offer for Sale Size is of around 60 crore Equity Shares aggregating up to ₹1,544.45 Cr (at an upper price band of Rs. 26).

Fresh Issue

The company has planned to raise fresh capital comprising an aggregate of 1,188,046,000 equity shares having Face Value ₹10 aggregating up to Rs. 3,088.91 Cr at the upper price band of Rs. 26. The net proceeds will be utilized for funding future capital requirements as Indian railways are on the verge of turnaround and augmenting general corporate purposes.

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