IRFC - Indian Railway Finance Corporation Share Price

In the earnings conference call for Q2 FY 2025-26, management provided an optimistic outlook regarding Indian Railway Finance Corporation (IRFC) future growth and diversification strategies. The company's profit after tax (PAT) was reported at nearly INR 1,780 crores for Q2, reflecting a growth of over 10% compared to the previous year, while the half-year PAT reached INR 3,523 crores, setting a new high for IRFC. The net worth soared past INR 56,000 crores, with earnings per share (EPS) reported at INR 5.39.

Management highlighted a significant increase in new business agreements, with a nine-fold growth resulting in agreements worth INR 36,000 crores signed between September 26 and 29, 2025. This brought the total to approximately INR 45,000 crores in H1, primarily in sectors like renewable energy, transmission, and coal mining.

Furthermore, the net interest margin (NIM) improved from 1.42% in the last financial year to 1.55% by the end of H1. The Board declared a record interim dividend of INR 1.05 per share, reinforcing shareholder trust. Notably, IRFC maintained a zero non-performing asset (NPA) record, demonstrating risk management efficacy.

Looking ahead, management expressed commitment to continue expanding into renewable energy, logistics, and infrastructure sectors associated with railways, with an ambitious pipeline that includes guidance for disbursements of INR 30,000 crores for FY 2025-26. They aim for consistent double-digit growth in PAT and see potential for sustained upward trends in assets and profitability over the coming years.

1. Question: "How are you approaching the challenge of building human capital when you're going outside the realm of Indian Railways?"
   Answer: I appreciate your concern regarding our human resources. Our focus is on hiring the best talent. We've brought in experts from railways and sister CPSEs, and our business development team is led by a seasoned professional. We aim to attract top talent in the industry and have increased our team size by 50% to enhance our capabilities in this new venture while maintaining efficiency.

2. Question: "What is the difference between sanctioned limit and agreement limit for NTPC BOBR rakes?"
   Answer: The sanctioned limit is the total amount approved by the board, while the agreement limit refers to the portion finalized for execution. For NTPC, we have a sanctioned limit of INR 700 crores, but the agreement for INR 250 crores has been signed. We're still working on executing the remaining documentation.

3. Question: "What are your expectations for disbursement and AUM growth for the next quarter?"
   Answer: We maintain a guidance of INR 30,000 crores in disbursements for this fiscal year. So far, we've disbursed INR 7,000 crores, and we anticipate adding INR 10,000 to INR 15,000 crores in Q3. We're confident about meeting our targets for Q4 as well, given our strong pipeline.

4. Question: "Are you considering project financing on a milestone basis?"
   Answer: Yes, we do project financing based on milestones. During credit appraisals, we discuss completion timelines with borrowers and set milestones accordingly, which helps us monitor progress effectively and ensure timely funding.

5. Question: "Is there further scope for rates to come down, influencing our NIM?"
   Answer: We operate with benchmark rates rather than directly linked to repo rates. Our margins have improved significantly with diversification, and currently, our NIM stands at 1.55%. Given our asset quality and competitive rates, we're optimistic about further improvements in NIM as we grow.

6. Question: "How do you perceive delinquency risks moving outside the railway business?"
   Answer: We address this with a whole-of-government approach, focusing on lending to strong government-backed entities like NTPC and high-quality CPSEs. Our careful selection of assets minimizes risk, and we anticipate maintaining our zero NPA record.

7. Question: "Do you foresee a return to MAT liability in the future?"
   Answer: Currently, we have around INR 3,000 crores of unabsorbed depreciation that protects us from MAT. Based on our business model and depreciation levels, we don't anticipate any MAT liability for the next 5 to 7 years.

8. Question: "What is the target AUM growth considering the opportunities you have?"
   Answer: We believe that over the next 5 to 10 years, we will see an upward trajectory in both AUM and PAT, driven by our diverse loan book. While I won't commit to a specific CAGR, our goal for double-digit annual growth remains intact.

9. Question: "Are there percentage caps for non-railway disbursement?"
   Answer: There's no internal cap on non-railway segments; however, RBI guidelines limit funding to 30% of net worth for a single entity. Currently, around 75% of our AUM is from railways, with plans to move towards 25% from diversified lending.

10. Question: "What are the financing opportunities in the railway ecosystem?"

Answer: We prioritize upstream financing opportunities within the railway ecosystem. Our pipeline remains robust, and we are focused on leveraging this to ensure sustained growth in our funding activities.