Subscribe to Indian Railway Finance Corporation: Mehta Equities

Mehta Equities has come out with its report on Indian Railway Finance Corporation. The research firm has recommended to ”Subscribe” the ipo in its research report as on January 18, 2021.

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Mehta Equities IPO report on Indian Railway Finance Corporation.

Indian Railway Finance Corporation (IRFC) is ‘Mini-Ratna Category-I’ company promoted by the President of India, acting through the Ministry of Railways (MoR), Government of India (GoI). It is registered with the RBI as a NBFC & classified under the category of an “Infrastructure Finance Company”. Their primary business is financing the acquisition of rolling stock assets, leasing of railway infrastructure assets and national projects of the GoI (Project Assets) and lending to other entities under the MoR. As of September 30, 2020, their total AUM consisted of 55.34% of lease receivables primarily in relation to Rolling Stock Assets, 2.25% of loans to central public sector enterprises entities under the administrative control of MoR (“Other PSU Entities”), and 42.41% of advances against leasing of Project Assets. Over the last 3 decades, IRFC has played a significant role in supporting the capacity enhancement of the Indian Railways by financing a proportion of their annual plan outlay.

Valuation and Outlook

Hence, in the view of the reasonable valuations and growth supportive rationales, we recommend investors to ‘SUBSCRIBE FOR LONG TERM’ while investors who look for listing gain only may see decent 10-15% listing gains in the best case scenario. We argue investors should look at this IPO offer only with a long term perspective wherein it can deliver healthy returns on investment.

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