IPO Flash – IRFC IPO Review

IPO Flash – IRFC IPO Review

Overview

IRFC is a dedicated borrowing arm of Indian Railways with 100% ownership with GoI.

Low Risk Model with Consistent Financials.

It’s a Stable business with modest profitability.

IRFC is a dedicated borrowing arm of Indian Railways with 100% ownership with Govt of India.

Competitive strengths

  • Strategic role in Indian Railways growth.
  • Sound credit rating i.e. CRISIL AAA/A1+ and ICRA AAA/A1+.
  • Competitive cost of borrowing.
  • Strong financial performance.
  • Sound asset-liability management.
  • Experienced management team.

Financials and Valuations

It is reasonably valued and having a high credit worthiness. Its PAT CAGR was ~50% over FY17-1HFY21 with RoAE of 10-11% during the period; lower than PFC/REC.

There are no directly comparable peer companies which operate in a business space similar to that of IRFC. However, when comparing it with other PSU NBFCs, IRFC stands apart with nil NPAs but lower (albeit stable) margins

Conclusions

Do subscribe for Long term listing gains. It’s a unique, Risk-free and Sustainable business model. Grey Market premium is also fell by Rs.1.6 on 18th Jan 2021.

Sadly all the PSU’s are trading at below book value and having a sharp corrections and no takers at current bullish market.

Sathish Kumar

Equity Fund Manager | Financial Consultant | Author

Whatsapp / Call –  +919841058689

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