IRFC - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.6
| Stock Code | IRFC | Market Cap | 1,36,187 Cr. | Current Price | 104 ₹ | High / Low | 149 ₹ |
| Stock P/E | 19.4 | Book Value | 43.3 ₹ | Dividend Yield | 2.02 % | ROCE | 5.83 % |
| ROE | 12.8 % | Face Value | 10.0 ₹ | DMA 50 | 103 ₹ | DMA 200 | 116 ₹ |
| Chg in FII Hold | 0.18 % | Chg in DII Hold | 1.35 % | PAT Qtr | 1,802 Cr. | PAT Prev Qtr | 1,777 Cr. |
| RSI | 56.1 | MACD | 1.66 | Volume | 96,39,692 | Avg Vol 1Wk | 1,21,98,316 |
| Low price | 87.0 ₹ | High price | 149 ₹ | PEG Ratio | 8.80 | Debt to equity | 2.73 |
| 52w Index | 27.8 % | Qtr Profit Var | 10.5 % | EPS | 5.36 ₹ | Industry PE | 19.8 |
Core Financials:
IRFC shows moderate fundamentals. ROE is 12.8% and ROCE 5.83%, reflecting weak efficiency. EPS at ₹5.36 is modest, supported by quarterly PAT growth (₹1,802 Cr vs ₹1,777 Cr, +10.5%). Debt-to-equity is high at 2.73, indicating leverage risk.
Valuation:
Stock P/E of 19.4 is in line with industry average (19.8), suggesting fair valuation. PEG ratio of 8.80 highlights stretched growth expectations. Price-to-book is ~2.4, moderately expensive. Dividend yield of 2.02% provides income support.
Business Model & Health:
IRFC operates as the financing arm of Indian Railways, benefiting from government backing and infrastructure demand. Competitive advantage lies in its monopoly-like position in railway financing. However, profitability efficiency remains weak, and high leverage limits flexibility.
Entry Zone:
Ideal entry zone: ₹95–₹100. Current price ₹104 is slightly above fair entry. Long-term holding is viable with government support, but efficiency and leverage risks must be monitored.
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Positive
- Government-backed monopoly in railway financing
- Dividend yield of 2.02%
- Quarterly PAT growth (+10.5%)
- FII (+0.18%) and DII (+1.35%) holdings increased
- Technicals show mild bullishness: RSI 56.1, MACD 1.66
Limitation
- Weak ROCE (5.83%)
- High debt-to-equity (2.73)
- PEG ratio (8.80) indicates overvaluation
- EPS modest at ₹5.36
- Price below 200 DMA (116 vs 104)
Company Negative News
- Efficiency metrics remain weak despite profit growth
- High leverage limits flexibility
Company Positive News
- Quarterly PAT growth (₹1,802 Cr vs ₹1,777 Cr)
- Institutional confidence improved (FII/DII increases)
- Technical indicators show mild bullishness
Industry
Infrastructure financing sector trades at industry P/E of 19.8, supported by government spending. IRFC trades near fair value but lags peers in efficiency due to high leverage.
Conclusion
IRFC offers moderate fundamentals with government backing and dividend support but weak efficiency and high leverage. Rating: 3.6. Entry near ₹95–₹100 is preferable. Long-term holding is viable with a 3–5 year horizon, contingent on efficiency improvement. Exit strategy around ₹140–₹145 if fundamentals stagnate.
Would you like me to also prepare a railway sector overlay HTML table comparing IRFC with IRCTC and IRCON, so you can benchmark valuation, ROE, and leverage side by side?