IRFC share price: Why is Navratna PSU stock skyrocketing? EXPLAINED

IRFC share price: Shares of the railway PSU Indian Railway Finance Corporation (IRFC) have been on an uptrend for the last four straight sessions. IRFC share price ended on Friday at ₹123.70 apiece on the NSE, logging over 11 per cent rise in four sessions. 

According to stock market experts, the IRFC share price rally can be attributed to the Government of India's move to grant the company grand Navratna status. They said the GoI move would make its corporate moves a little faster as it won't require approval from the GoI for certain projects after the Navratna status grant. They said the IRFC share price has made a strong base at ₹115 apiece and may soon touch ₹140 per share as IRFC shares are trading at an attractive valuation and the company's fundamentals are also very strong.

Triggers for IRFC share price

Highlighting the fundamentals of IRFC shares, Gaurav Goel, Founder & Director of Fynocrat Technologies, said, “IRFC has delivered steady financial growth, with average revenue growth of 15% and median profit growth of 11%. The ROE stands at 13.7%, reflecting a strong ability to generate returns despite operating in a regulated sector. IRFC is trading at a P/E ratio of 24, slightly above the industry median of 20. This indicates that investors are willing to pay a premium for its predictable earnings and government backing. "

Gaurav Goel said the company's zero NPA status, robust asset quality, and high capital adequacy ratio (CRAR) of over 700% further strengthen its financial stability. The company also maintains a self-imposed debt-to-equity limit of 10, currently at 8-9, allowing room for expansion.

IRFC news

Speaking on the reason for IRFC share price rally, Ansul Jain, Head of Research at Lakshmishree Investment and Securities, said, “IRFC share price is rising after the GOI's grant of Navratna company status. After this move, the company's corporate function will become smoother as it won't require the government's approval for certain projects from now on.”

The railway PSU informed the Indian exchanges about the grant of Navratna status, saying, “Indian Railway Finance Corporation (IRFC), a key financial institution under the Ministry of Railways, has been awarded the prestigious Navratna status by the Government of India. This recognition marks a significant milestone in IRFC’s journey as one of the Central Public Sector Enterprises (CPSE) supporting India’s railway infrastructure.”

IRFC share price target

Expecting more upside in IRFC shares, Sumeet Bagadia, Executive Director at Choice Broking, said, “IRFC share price has crucial support placed at ₹115 apiece. IRFC shareholders can hold the scrip, maintaining a stop loss at ₹115 for the short-term target of ₹140. Fresh investors can initiate fresh buying in the scrip for ₹140, maintaining stop loss at ₹115.”

With a revenue of over ₹26,600 crore and a profit after tax exceeding ₹6,400 crore as of March 31, 2024, IRFC is now the third-largest government NBFC in India. It has played a key role in funding nearly 80% of Indian Railways' rolling stock and was the first CPSE to issue a 30-year tenor bond in overseas markets. As of December 31, 2024, IRFC has a market capitalization of over ₹2,00,000 crore, an asset under management (AUM) of ₹4.61 lakh crore, a net worth of around ₹52,000 crore, and a balance sheet size of more than ₹4.81 lakh crore.

Beyond its core role in railway asset financing, IRFC is expanding into sectors with strong forward and backward linkages to railways, such as power generation and transmission, mining, fuel, coal, warehousing, telecom, and hospitality. The company has already secured funding for 20 BOBR rakes for NTPC, worth ₹700 crore, and was recently declared the lowest bidder to finance a ₹3,190 crore loan for Patratu Vidyut Utpadan Nigam Limited (PVUNL), a subsidiary of NTPC.

Additionally, NTPC Renewable Energy Limited (NTPC REL), a wholly owned subsidiary of NTPC Green Energy Limited (NTPC GEL), has accepted IRFC’s bid for ₹7,500 crore to finance a Rupee Term Loan (RTL) against its Request for Proposal. IRFC is also actively exploring opportunities to fund rolling stock requirements for Indian Railways customers, container train operators, renewable energy needs of Indian Railways, Metro Rail projects, port rail connectivity, and PPP projects sanctioned by Indian Railways.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.