Premium Stock at Low Price - IRFC

IRFC - Good Stock for Long Term Investment

The Company

Indian Railway Finance Corporation is a Govt of India Enterprise, created for financing the Rail Transport Sector by way of raising funds from capital market at competitive cost for augmenting railway plan and finances.

Objectives of IRFC

The primary objective of IRFC is to meet the ‘Extra Budgetary Resources’ (EBR) requirement of the Indian Railways through market borrowings at the most competitive rates and terms. 

From 2011-12 onwards, IRFC has forayed into funding of railway projects and capacity enhancement works. The Company has been assigned the additional task of funding Railway Projects through Institutional Finance.

IRFC has also been lending to various entities in Railway sector like Rail Vikas Nigam Limited (RVNL), Railtel, Konkan Railway Corporation Limited (KRCL), Pipavav Railway Corporation Limited (PRCL) etc.

IRFC’s constant endeavor has been to diversify its borrowing portfolio in terms of instruments, markets and investors.

Stock Price Analysis:

Current Stock Price as on 22-Oct-2021.is 25.80 and the price saw a surge of 6% in the week ended 22-oct-2021.

Although there is high interest payments compared to its earnings of the company, still since it is backed by the government of India, its Fundamentals is no-doubt good. With the launch of new Gati-Shakti mission by Modi Government, the railways will spend more for new lines and cargo terminals. Since the Railways and allied Govt entities are the only Loaner of this Financial Institution, there won't be any NPA in IRFC books of accounts.

Being recently traded in Stock Market, only 9 months data is available from which a very long term expectation may not be construed at this point, however, looking to the fundaments, this can be considered a good to include in the watchlist for buy for long term investment. It is also important to note that this company pays dividends on stocks.

As per the technical chart the SL looks like to be near 20-21. Further, the price formed a triangle pattern which rightly made a bullish break out.

With a small retracement, it may scale new height. Who knows it may become the next IRCTC.

Technical Chart

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October 22, 2021

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