On October 9, 2024, the Indian Railway Finance Corporation (IRFC) witnessed a notable rise in its share price, aligning with ongoing interest in share market investment. The IRFC share price increased by 2.60%, reaching an intraday high of ₹155.75 per share. This surge followed the company's announcement of significant financial moves that are expected to boost its market position.
Financing approval boosts share price
The recent uptick in the IRFC share price was driven by the Board of Directors’ approval to finance up to ₹700 crore under a finance lease. This funding is designated for 20 BOBR rakes procured under the General-Purpose Wagon Investment Scheme (GPWIS) of the Ministry of Railways, intended for NTPC.
In an exchange filing, the company stated, "The Board of Directors of the Company at its meeting approved financing of 20 BOBR Rakes procured under the General-Purpose Wagon Investment Scheme (GPWIS) of the Ministry of Railways to NTPC for an amount up to ₹700 crore under Finance Lease." Additionally, the Board appointed Ajoy Choudhury as Chief Risk Officer for a fixed two-year tenure.
Financial performance overview
In the first quarter of FY25, IRFC reported a net profit increase of 1.65%, amounting to ₹1,576.8 crore, compared to ₹1,551.3 crore in Q1FY24. The total revenue from operations also saw a 1.4% annual rise, reaching ₹6,765.6 crore for the quarter ending June 30, 2024.
IRFC's role in railway funding
Established in December 1986, IRFC serves as the dedicated funding arm of Indian Railways. Its primary objective is to mobilise funds from both domestic and international markets to support the Extra Budgetary Resources necessary for the expansion and operation of the Indian Railways.
By borrowing from financial markets, IRFC acquires assets that are subsequently leased to Indian Railways, ensuring a consistent flow of resources for infrastructure development. The company is primarily owned by the Government of India and is governed by the Ministry of Railways. It raises capital through various sources, including term loans and bonds, to fulfil the financial needs of one of the world's largest railway networks.
As per BSE data, IRFC's market capitalisation stands at ₹2,01,385.68 crore, placing it in the BSE 200 category. At 9:53 AM, IRFC shares were trading 1.52% higher at ₹154.10 per share, while the BSE Sensex was up by 0.28% at 81,866.90.
Key takeaways
This development reinforces IRFC's critical role in the ongoing dynamics of share market investment in India's railway infrastructure.
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