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Has the funding arm of the Indian Railways finally started to chug along?

Has the funding arm of the Indian Railways finally started to chug along?

Has the funding arm of the Indian Railways finally started to chug along?
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By CNBCTV18.com Nov 17, 2022 1:28:47 PM IST (Updated)

The company also has zero tax expenses as it has been granted exemptions by the government of India.

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Shares of Indian Railway Financing Corporation, the dedicated funding arm of the Indian Railways, extended gains on Thursday after closing above its IPO price for the first time on Wednesday.
The stock has gained 16 percent over the last two sessions, and over 30 percent during the last month.

What Does IRFC Do?

The company lends to other units of the Indian Railways like RVNL, RailTel, Konkan Rail and Pipavav Rail. These companies use the funds to acquire rolling stock assets and also build infrastructure, which comprises of a significant chunk of Indian Railways' annual capex.
Project mix between funding rolling stock and building railway infrastructure is 45-55 percent respectively.
No NPA, No Tax
Despite being a lending facility, the company has zero NPAs. How? This is possible as the lending to the Indian Railways is guaranteed by the government of India.
The company also has zero tax expenses as it has been granted exemptions by the government of India. This means significantly lower expenses.

What also lowers expenses is the fact that it has only 37 employees and they work out of the basement of Hotel Ashok in Chanakyapuri, New Delhi.

The company makes over Rs 6,000 crores in profits annually and has Rs 5 lakh crore in assets under management.

Other factors about the company:
  • FY22 Net Worth: Rs 41,000 crore
  • FY22 Funding Cost: 6.42 percent
  • Net Profit in FY22: Rs 6,000 crore
  • Assets Under Management: Rs 5 lakh crore
  • Shares of IRFC are trading 5.4 percent higher at Rs 28.40.
    Research Courtesy: CNBC Awaaz
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