IPO Analysis : Indian Railway Finance Corporation Limited

IPO Analysis : Indian Railway Finance Corporation Limited

The Indian Railway Finance Corporation (IRFC) incorporated in 1986 is a public-sector enterprise that is wholly-owned by the Government of India. IRFC is primarily engaged in financing the acquisition of rolling stock assets, leasing of railway infrastructure assets, and lending to entities under the Ministry of Railways (MoR). Being the borrowing arm of Indian Railways, IRFC is responsible to raise funds for MoR that is required to procure rolling stock assets (wagons, trucks, electric multiple units, locomotives, coaches), its improvement, expansion, and assets management.

It follows a financial leasing model to finance rolling stock assets procurement for a lease period of 30 years. In fiscal 2019, the actual capital expenditures by the Indian Railways were Rs. 1,334 billion, out of which, IRFC financed Rs. 525.35 bn accounting for 39.34% expenditures.

IRFC (Indian Railway Finance Corporation) is in the principal business of borrowing funds from the financial markets to finance the acquisition/creation of assets which are then leased out to the Indian Railways or any entity under the Ministry of Railways. As per the DRHP, IRFC is registered with the RBI as an NBFC-ND-IFC (i.e. a Non-Deposit accepting Infrastructure Finance Company). The public issue will be in the form of new shares issued by the company as well as an offer for sale by the Government (which is currently the sole shareholder in IRFC).

Key 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.

Objective of the Issue: The net IPO proceeds are proposed to be utilized for the following objects:

•     To augment company's equity capital base to meet business future growth requirements.
•     To meet general corporate purposes.

Important Dates to Remember:

13th Jan – Announcement of Price Band

15th Jan – Anchor Investors Allotment

18th Jan – Offer Opens

20th Jan – Offer Closes

25th Jan – Finalization of Basis of Allotment

27th Jan – Unblocking of ASBA Accounts

28th Jan – Credit of Equity Shares to Depository Accounts

29th Jan – Commencement of Trading

Verdict: Since it is a first PSU NBFC getting listed on exchange, and it is responsible for financing of 85% railway projects, future is good with good margins. Grey market price is Rs 2 (as on 13th January 2021). In my view one can apply for this IPO. 

OPEN DEMAT AND TRADING ACCOUNT in Edelweiss Broking

CLICK HERE 👇 to open account now.

https://bit.ly/31Hb1w5

India Best stock broker offering flat Rs 10 per trade, Lowest brokerage fee in Stock market Industry.

No AMC charge for first year.

Edelweiss mobile App is awarded INDIAs No. 1 Platform.

No hidden charges.

Don't wait open your Demat and trading account now in 15 minutes.

CLICK HERE 👇 to open account now.

https://bit.ly/31Hb1w5

#Infyture

Sources: Various publications

Disclaimer: The information provided herein is based on publicly available information and other sources believed to be reliable, but involve uncertainties that could cause actual events to differ materially from those expressed or implied in such statements. The document is given for general and information purpose and is neither an investment advice nor an offer to sell nor a solicitation. While due care has been exercised while preparing this document, we do not warrant the completeness or accuracy of the information. We will not accept any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice.

Follow, Like, subscribe and share

"Your Trust, Our Financial Expertise."

Infyture, Investment For Your Future

Email: infyture@gmail.com

Website: http://infyture.wordpress.com

Facebook Page: https://www.facebook.com/infyture4future/

Youtube:https://www.youtube.com/channel/UCjOxVGTKQiK5O0mdcuMBCdw?view_as=subscriber

Blogger: https://infyture.blogspot.com/

WhatsApp: https://wa.me/message/SXE3AQCBR3O4B1

Telegram: https://t.me/infyture

Goal Based Planning || Equity Tip || Demat Account || Mutual Fund Investment || Life Insurance || General & Health Insurance || PMS & mini PMS || Retirement Planning || NPS Enrollment