Indian Railway Finance Corporation (IRFC), the dedicated financing arm of the Indian Railways, saw its shares rally 6.4% to Rs 138.50 on the Bombay Stock Exchange (BSE) following a significant announcement. The government has granted approval for IRFC to raise up to Rs 10,000 crore through deep-discount bonds, marking a strategic shift in funding for state-run enterprises.

Key Details of the Bond Issue

Strategic Implications

This move represents a notable change in the funding strategy for state-run enterprises in India. Deep-discount bonds, which are issued at a significant discount to their face value, can be an attractive option for both issuers and investors under certain market conditions.

Market Response

The market responded positively to this news, with IRFC's stock price experiencing a substantial increase:

About IRFC

IRFC is a public sector enterprise, serving as the dedicated financing arm of the Indian Railways. The company plays a crucial role in supporting the growth and modernization of India's railway infrastructure through various financing mechanisms.

This latest approval for a significant bond issue underscores IRFC's important position in funding railway projects and highlights the government's continued focus on developing India's transportation infrastructure.

Indian Railway Finance Corporation (IRFC), the dedicated financing arm of the Indian Railways, has released its financial results for the fourth quarter of the fiscal year and announced a significant resource raising plan. The company's performance shows a mixed picture, with revenue growth accompanied by a slight decrease in net profit.

Q4 Financial Highlights

• Revenue: ₹6,723.00 crore, up 4% year-over-year
• Net Profit: ₹1,682.00 crore, down 2% from the same period last year

The company's revenue growth of 4% year-over-year demonstrates IRFC's ability to expand its financing activities. However, the 2% decline in net profit suggests potential challenges in maintaining profitability amid changing market conditions.

Resource Raising Plan for FY 2025-26

In a significant development, IRFC has approved a plan to raise resources up to ₹60,000.00 crore for the fiscal year 2025-26 through various bond issues. This substantial resource mobilization effort underscores the company's commitment to supporting the ongoing expansion and modernization of India's railway infrastructure.

Annual Performance Overview

While the quarterly results provide a snapshot of IRFC's recent performance, it's also important to consider the company's annual figures for a broader perspective:

The annual figures reveal a more robust growth trajectory for IRFC. The company has achieved a significant 12.18% increase in revenue for the fiscal year 2024 compared to the previous year. This growth is mirrored in the EBITDA, which also saw a 12.25% year-over-year increase.

Net profit for the full year showed a positive trend, rising by 3.97% to ₹6,412.10 crore. This annual growth in profitability contrasts with the slight dip observed in the fourth quarter, suggesting that the company's overall performance for the year remains strong despite quarterly fluctuations.

The Earnings Per Share (EPS) also improved, rising from ₹4.72 to ₹4.91, representing a 4.03% increase. This growth in EPS indicates an enhancement in the company's profitability on a per-share basis, which is a positive sign for shareholders.

Operational Efficiency

IRFC has maintained a remarkably high Operating Profit Margin (OPM) of 99.50% for the fiscal year 2024, slightly improving from 99.43% in the previous year. This exceptionally high OPM underscores the company's efficient operations and its ability to control costs effectively while growing its revenue.

The company's interest expenses have risen by 15.21% year-over-year, reaching ₹20,101.50 crore in FY 2024. This increase in interest costs may be attributed to the expansion of IRFC's financing activities and could be a factor in the slight moderation of net profit growth compared to revenue growth.

Government Stake and Future Outlook

It's worth noting that the government holds a significant 86.36% stake in IRFC, highlighting its strategic importance in the railway financing sector.

IRFC's role as the financing arm of Indian Railways positions it uniquely in the market, with its performance closely tied to the development and expansion of the country's rail infrastructure. The company's ability to grow its revenue and maintain high operational efficiency, despite challenges, reflects the ongoing investments and developments in India's railway sector.

The approval of the substantial resource raising plan for FY 2025-26 further reinforces IRFC's commitment to supporting the growth of India's railway network. This move is likely to have significant implications for the company's future financial performance and its role in the nation's infrastructure development.

As IRFC continues to play a crucial role in financing railway projects, investors and stakeholders will be keenly watching how the company navigates the balance between growth and profitability in the coming quarters, particularly in light of its ambitious resource raising plans.