Indian Railway Finance IPO – Review, Allotment Status, Subscription, Price, Date & more

Indian Railway Finance IPO or IRF IPO is a new public sector undertaking IPO under the administrative control of the Ministry of Railways, Govt. of India. Indian Railway Finance was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets.

The Government has been planning to list the railway PSUs since almost an year ago, however, the same was deferred to undertake certain corrective measures to ensure that the valuation is appropriate and not less. The details of this IPO like the release date, IPO offer price, IPO size, IPO object and other details are provided in this article.


Indian Railway Finance IPO Review & Ratings

Indian Railway Finance IPO Ratings & Review
CriteriaRatings
Industry Sentiments8.8/10
Industry Ranking8.7/10
Company Background8.9/10
Company Reputation8.7/10
Competitive Edge8.2/10
Financial Statements9.2/10
Popularity Index8.3/10
Promoters Reputation8.7/10
Retail Appetite8.8/10
Top Brokers Review8.3/10
Overall Ratings8.7/10
Star Ratings★★★★★

Summary of Indian Railway Finance IPO or IRF IPO

indian railway finance ipoThe government has been wanting to release IPO for Indian Railway Finance and other railway PSUs since almost an year. There are 3 railway PSU IPOs, including Indian Railway Finance, which are under process. One of them has already been submitted with the SEBI and the other one has been deferred for the time being. These IPOs are part of the government’s Rs 72,500 crore disinvestment programme for 2017-18.

The Indian Railway Finance IPO might have certain part as secondary sale i.e. sale of existing shares of the company. Further, the offer size for secondary sale is expected to be Rs. 2,000 crores. The IPO for Indian Railway Finance is expected to be out by end of 2018. While the IPO was initially targeted to be released in the last quarter of 2017 calendar year, it was postponed so as to deal with the deferred tax liability of the company which had large impact on the valuation of the company and thereby on the IPO price.

More about IRF IPO

Recently, there has been certain notification by the ministry of Corporate affairs which has a direct impact on the valuation of this company. The move of ministry will lead to a lower taxation of Indian Railways Finance Corporation (IRFC), the market borrowing arm of Indian Railways. This shall result in higher valuation and could speed up the green signal for an initial public offer of the company.

The will also result in increasing reserves and surplus, which it can use to up the equity of the company, without seeking it from the Railway Ministry. The Ministry’s move can get the tax burden on IRFC down to 25 per cent from 56 per cent, IRFC’s Managing Director Santosh Kumar Pattanayak .  The extent of higher equity each year will increase its market borrowing capacity by ten times that of equity infusion

These book-running lead managers have already been appointed for the IRFC IPO, namely IDFC, HSBC, ICICI Securities and SBI Caps.


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Indian Railway Finance IPO Date

The IPO for Indian Railway Finance is expected to be out by end of 2018. While the IPO was initially targeted to be released in the last quarter of 2017 calendar year, it was postponed so as to deal with the deferred tax liability of the company which had large impact on the valuation of the company and thereby on the IPO price.

Indian Railway Finance IPO Subscription

 Subscription
Day 1 X
Day 2 X
Day 3 X
Day 4 X
Day 5 X

Upon release of the Indian Railway Finance IPO, the quantum of shares subscribed would be updated herein on a daily basis.

Indian Railway Finance IPO Allotment Status

Once the IPO bidding is closed and the allotment is completed, the details of the shares allotted would be updated herein.

Indian Railway Finance IPO Price Band

The offer price for the Indian Railway Finance IPO is not yet decided by the company. The same would be updated in this section, once the price is finalised.

Indian Railway Finance IPO Issue Size

The Indian Railway Finance IPO is expected to be around Rs. 2,000 crores. However, this is a tentative figure. The final figure would be posted herein, once the same is finalised by the company. 

Indian Railway Finance IPO Equity Share Offerings

Number of shares being offered under the Indian Railway Finance IPO has not been yet finalised by the company. This section will be updated, once the details are released by the company.


Indian Railway Finance – Company Overview

Indian Railway Finance Corporation (IRFC) was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets. IRFC is a Schedule ‘A’ Public Sector Enterprise under the administrative control of the Ministry of Railways, Govt. of India.

It is also registered as Systemically Important Non–Deposit taking Non Banking Financial Company (NBFC – ND-SI) and Infrastructure Finance Company (NBFC- IFC) with Reserve Bank of India (RBI). In more than 30 years of existence, IRFC has played a significant role in supporting the expansion of the Indian Railways and related entities by financing a significant proportion of its annual plan outlay.

The primary objective of IRFC is to meet the predominant portion of ‘Extra Budgetary Resources’ (EBR) requirement of the Indian Railways through market borrowings at the most competitive rates and terms. The Company’s principal business therefore is to borrow funds from the financial markets to finance the acquisition / creation of assets which are then leased out to the Indian Railways.

Key members of Indian Railway Finance:

  • S.K. Pattanayak, Managing Director
  • Niraj Kumar, Director Finance
  • Kishor J Devani, Independent Director
  • Aditi Sengupta Ray, Independent Director
  • Chetan Venugopal, Independent Director

Competitive Strengths of Indian Railway Finance

  • Assured net interest margin
  • Important strategic position in Indian Railways
  • No non-performing assets
  • Low finance risk due to government support
  • Low cost of borrowings
  • Competent and committed workforce

Business strategies of Indian Railway Finance

  • Diversification of borrowing portfolio in terms of market, investors and instruments
  • Optimum utilization of resources
  • Explore use of innovative and diverse instruments for raising funds
  • Provide timely funding for acquisition of Rolling Stock assets for use by the ministry

Indian Railway Finance – Financial Statements

A snapshot of the financial details of the company are provided below for your ready reference:

Assets of the Company

Assets (in INR & Millions)
 Mar’17Mar’16Mar’15Mar’14Mar’13
Non-Current Asset1,185,625979,062807,154759,196655,897
Current Asset110,872104,94269,31680,10451,654
Total Asset1,296,4961,084,004876,470839,300707,550

Revenue & PAT of the Company

Revenue & Profits (in INR & Millions)
 Mar’17Mar’16Mar’15Mar’14Mar’13
Total Revenue9047775073694026198355515
Profit after Tax (PAT)93388487758370075216

Earnings per Equity Share

Earning per Equity Share (in INR)
 Mar’17Mar’16Mar’15Mar’14Mar’13
Basic143.08200.78211.58233.21221.75
Diluted143.08199.59211.41233.16218.52

There is an increasing trend in the revenue of the company and also the PAT. Even the asset base appears to be getting stronger. Accordingly, it appears to be a fair investment opportunity for the investors.


Indian Railway Finance Promoters

Since it is a public sector undertaking, the promoter is Government of India being represented by President of India.

Promoter Interest in the company.

The promoter companies hold shareholding in the company and hence would be interested to the extent of their stake and the dividend and related similar pay-outs. The other details would be updated once the company releases the relevant documents

Promoter Interest in property of the company

These details would be shortly updated for Indian Railway Finance promoters.


Indian Railway Finance IPO Offer Details or Issue Details

OfferThe offer is expected to be close to Rs. 1,000 crores
Of which
Issue reserved for the Market Makers
Net Issue to the public
Of which
Allotment to retail investors
Allotment to other investors
Equity Shares outstanding prior to the offer
Equity Shares outstanding after the Offer

The details of the issue would be updated once the company finalizes on such details.


Indian Railway Finance IPO Issue Object

The objects of the IPO are not yet disclosed. However, being a finance arm, it is expected to use the funds collected from IPO for certain further investment or repayment of debt.


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Indian Railway Finance IPO – Basis of the Offer Price

The offer price for the Indian Railway Finance is not yet finalised. The offer price is generally mutually decided by the company and the lead managers. The lead managers assess the market situations and then advise the company. This process is referred to as book building process. The offer price is also based on various qualitative and quantitative factors. These are discussed below:

The qualitative factors relevant to decide the issue price:

  • Assured net interest margin
  • Important strategic position in Indian Railways
  • No non-performing assets
  • Low finance risk due to government support
  • Low cost of borrowings
  • Competent and committed workforce

The quantitative factors relevant for the issue price are:

  • Earning per share
  • Price/earning ratio
  • Return on Net Worth
  • Net Asset Value – NAV per Equity Share
  • Comparison with listed industry peer, if any

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Indian Railway Finance IPO Lead Managers

Lead Managers*
IDFC 
HSBC
ICICI Securities
SBI Cap

* The details provided above are tentative and might undergo change. Once finalised by the company, the details would be updated herein.


Indian Railway Finance IPO Registrar to offer

Registrar to offer
To be updated shortly

Indian Railway Finance IPO Review by Top 10 Stock Brokers

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Sharekhan
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5Paisa
Karvy
Motilal Oswal

Indian Railway Finance IPO Grey Market Premium

Grey market for Indian Railway Finance IPO would open a fortnight i.e. 15 days before the release of the IPO. The grey market prices are usually also out in the market, 15 days before the release. The kostak rates are generally available with the stock broking agents at a local level and not on any portal as such. This section will be updated, once the IPO is set to release.


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Indian Railway Finance IPO News

News 1 – Indian Railways Finance Corporation, 2 other rail PSUs IPOs to hit markets in Q4


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