10% Upper Circuit, All-Time High; Only Buyers In India's Largest Railway Stock IRFC, Gives 610% Return

Indian Railway Finance Corporation (IRFC), the railway financier, is a beacon of success when it comes to a strong bull run on the stock market. In the year 2023, IRFC was on the map of large-caps from midcaps. The stock entered 2024 with a star-like performance, crossing new back-to-back all-time highs. The one-of-a-kind trading session on Saturday was no different. IRFC froze at its 10% upper circuit, which was also its new record high. IRFC is now eying the Rs 200 level.

With a 10% upper circuit, it means there were many buyers in IRFC but no sellers. The performance also comes ahead of Ayodhya's Ram Mandir inauguration on January 22nd.

The city of Ram Lalla is set to transform in the coming years, and railways are one of the key segments to get a revamp. A business-like IRFC will be among the key transformers for Ayodhya. Apart from this, massive allocations by the government to transform Indian Railways have already been viewed as positive in the sector. IRFC along with other railway stocks since last year till date have emerged as a multi-bagger and wealth-creating giant.

Also,railway stocks are blossoming ahead of Union Budget as expectations of increase in government spending for the strengthening of railway infrastructure is on the cards.

IRFC has become a special stock though. It was midcap at the start of 2023 when it traded between Rs 30-35 levels. The stock journeyed to enter the large-cap basket, and even crossed over Rs 175 mark. Now, IRFC's market cap has crossed over Rs 2 lakh crore, making it the largest railway stock.

On Saturday, after market hours, IRFC share price closed at 10% upper circuit at Rs 176.39 apiece on BSE. This is also the stock's new lifetime high. Its market cap is over Rs 2.30 lakh crore.

IRFC's share price was listed on BSE and NSE, it had an IPO price of Rs 26 per share. Its listing day closing price was Rs 24.85 apiece on BSE. The stock's market debut was on January 29, 2021. IRFC launched its Rs 4,633.38 crore IPO from January 18 to 20 of 2021. On the final day, the IPO had subscribed by 3.49 times.

From its IPO issue price, IRFC shares have skyrocketed by a whopping 578.42%. But the stock has gained by a breathtaking 609.82% from its listing day closing price.

The major boost for railway stocks in 2023 has to be the all-time high budget allocation. The ministry had allocated a whopping Rs 2.40 lakh crore as Gross Budget Support (GBS) for Capital Expenditure during 2023-24, of which, Rs 1.85 lakh crore is under capital, Rs 45,000 crore under Railway Safety Fund and Rs 10,000 crore as a contribution towards Rashtriya Rail Sanraksha Kosh.

In its annual report for 2022-23, IRFC's chairperson and Managing Director Shelly Verma revealed that the board has authorized the Company to borrow funds amounting to Rs 50,000 crore during FY 2023-24 for meeting the funding requirement of Indian Railways, if any, new business activities, refinancing of existing loans and for other general corporate purposes. For the FY 2023-24, the Company is looking forward to the diversification of the lending portfolio and fund projects with forward or backward linkage (s) with Railways.

Shelly further highlighted that Indian Railways are now poised to take a transformational leap in the Amrit Kaal of the post-Independence period and fulfil the vision of 'Viksit Bharat' which includes Modern, faster, available on-demand passenger services and facilities, a substantial share in freight cargo with ancillary services in logistics parks and domestic industry-driven rail infrastructure of the highest standards. A record capex target of Rs 2.60 lakh crores in 2023-24 is targeted to initiate the necessary changes for this vision, across the entire network.

India is committed to touching net Zero carbon by 2070 will rest in part on more rail-bound passenger and cargo movement.

The MD is confident that IRFC is well-positioned to seize the emerging opportunities.

In recent times, one of the seizing opportunities is in Ayodhya.

Ahead of the inauguration of Ram Mandir on January 22, PM Narendra Modi inaugurated the redeveloped Ayodhya Railway Station and flagged off new Amrit Bharat trains and Vande Bharat trains. He also dedicated several other railway projects to the nation.

The redeveloped Ayodhya Railway Station - known as Ayodhya Dham Junction Railway Station, will have a cost of over Rs 240 crore. The station building will be 'accessible for all' and 'IGBC certified green station building'

Additionally, the PM flagged off two new Amrit Bharat trains viz Darbhanga-Ayodhya-Anand Vihar Terminal Amrit Bharat Express and Malda Town-Sir M. Visvesvaraya Terminus (Bengaluru) Amrit Bharat Express.

More superfast trains to travel on the soil of Ayodhya. PM Modi also flagged off six new Vande Bharat Trains. These include Shri Mata Vaishno Devi Katra-New Delhi Vande Bharat Express; Amritsar-Delhi Vande Bharat Express; Coimbatore-Bangalore Cantt Vande Bharat Express; Mangalore-Madgaon Vande Bharat Express; Jalna-Mumbai Vande Bharat Express and Ayodhya-Anand Vihar Terminal Vande Bharat Express.

IRFC, founded in 1986, works to mobilize funds from domestic and overseas markets to meet the predominant portion of the Extra Budgetary Resources requirement of Indian Railways. Since its inception, IRFC has funded the acquisition of 13,349 locomotives, 73,979 passenger coaches and 2,59,661 freight wagons.

Hence, chances are that IRFC can be among the financiers by the Railway Ministry for the transformation of Ayodhya and upcoming Indian Railway projects. The stock is currently overbought and few hiccups are expected but its long-term fundamentals are healthy and optimistic.

Disclaimer: The informations are just about the stock and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on the stock mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.