The Indian Railway Finance Corporation (IRFC) has been on an impressive streak, witnessing substantial gains in consecutive trading sessions. In a noteworthy development, IRFC's market capitalization recently exceeded Rs 1 lakh crore after its shares surged by 10%, reaching a new all-time high of Rs 84.80 per share.
As of today, IRFC's market capitalization stands at a formidable Rs 1.11 lakh crore, establishing its position as the most valuable railway public sector undertaking (PSU) and the 10th most valuable PSU in India. This achievement has led IRFC to surpass notable entities like Bharat Electronics Ltd., Bank of Baroda, and Gail India Ltd.
Over the past five trading sessions, IRFC's shares have soared by more than 17%, exhibiting remarkable resilience. In just a month, these shares have witnessed an extraordinary surge of over 73%. Over the course of a year, IRFC's shares have recorded an astounding gain of 270%, with a staggering increase of over 157% in 2023 alone.
In tandem with other stocks in the railway sector, IRFC has been on a remarkable upward trajectory, drawing optimism from analysts who are bullish about the sector's growth. They attribute this optimism to the government's pronounced emphasis on infrastructure development and the expansion of the railway network.
Recent developments further fuel this optimism. The Cabinet's approval of seven multi-tracking projects valued at Rs 3,25,000 crore stands as a pivotal moment, as these projects are poised to extend the Indian Railways' network by an impressive 2,339 kilometers, covering 34 districts across nine states.
Furthermore, during the recent G-20 summit, a strategic plan to enhance shipping and railway connections was jointly announced by India, the United States, the United Arab Emirates (UAE), and Saudi Arabia. The primary objective of this initiative is to establish efficient transportation links that connect Europe and the Middle East to India.
Given these significant advancements, investors maintain a positive outlook on railway stocks, acknowledging their substantial growth potential over an extended time frame.
IRFC, in its capacity as a provider of financial services, secures funds through bonds and offshore borrowings to finance the planned expenditures of railways and other developmental programs.
Industry analysts echo the positivity surrounding the railway sector, emphasizing improved revenue visibility, growth certainty, and a resilient business model. However, it is worth noting that growth might experience a temporary slowdown, particularly in fiscal 2024, due to limited new orders and the completion of existing orders. Notably, despite the absence of new orders in the June quarter, railway firms achieved robust operating margins due to a reduction in input costs.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not necessarily reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
Â
