IRFC Board Approves Rs.50,000 Crore Fundraising Plan

The Indian Railway Finance Corporation (IRFC) has announced a fundraising initiative, aiming to secure up to Rs.50,000 crore from both domestic and international markets. This plan, approved by the IRFC board, involves the issuance of bonds or procuring bank loans in FY25 for this fundraiser. 

IRFC’s Fundraising Mix

The IRFC plans to raise funds through a prudent mix of tax-free bonds, taxable bonds via private placements or public issues, capital gain bonds, government-guaranteed bonds, and government-serviced bonds. As the financial arm of the Ministry of Railways, IRFC’s primary objective is to secure the majority of the Indian Railways’ extra-budgetary resources (EBR) needs through market borrowings to support railway infrastructure projects

Strategic Move

This move comes as part of IRFC’s efforts to strengthen its financial capacity and support the upcoming  Indian Railways’ expansive infrastructure and development projects. By tapping into diverse funding sources, IRFC is aiming to ensure a flow of capital, essential for financing rolling stock and other critical railway infrastructure initiatives.

Positive Market Reaction

Following the announcement, IRFC shares continued their upward trend, marking the fourth consecutive session of gains. Today, the stock rose by 3.86% to Rs.179.90 on the BSE, increasing the company’s market capitalization to Rs.2.33 lakh crore. 

Financial Performance

The fundraising plan aligns with IRFC’s strong financial performance in FY24. The company reported a 33.6% year-on-year increase in net profit for Q4 FY2024, reaching Rs.1,717 crore, up from Rs.1,285 crore in the previous year. The total revenue from operations grew by 1.73% to Rs.6,473 crore.

Sector Growth and Government Support

IRFC’s growth aligns with the optimistic trajectory of the railway sector, fueled by the government’s increased infrastructure investments. The Union Budget 2024 saw an 11.11% surge in capital expenditure to Rs.11.11 lakh crore, reportedly allocated to railway and road projects for increasing connectivity. Initiatives like PM Gati Sakti are anticipated to drive efficiency and urban transformation, strengthening companies like IRFC.

Conclusion: The IRFC’s Rs.50,000 Cr fundraising initiative, coupled with its financial performance and the government’s infrastructure investments, marks a significant move in expanding its financial resources and positions it strongly to support the expansive growth of India’s railway infrastructure.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.