Indian Railway Finance Corp (IRFC): Top Railway Stock Below Rs 160, Gets Buy Call; Target Near Rs 200

Indian Railway Finance Corporation (IRFC) is the largest railway stock and a multi-bagger Miniratna on exchanges. IRFC has been a beacon of success on exchanges since last year. In 2024, the stock has given double-digit returns, and in a year, the upside is impressively by triple-digit. The long-term investors are the biggest gainers in IRFC, and that's not all there is an opportunity for short-term gains ahead as well.

Brokerage Prabhudas Lilladher is the latest to like IRFC shares and has given a technical view of buying for a target price of Rs 195. Currently, IRFC shares are below Rs 160, and if they move past this level then chances of a further upside in the near term are promising.

The technical indicators of IRFC shares such as its popular moving averages like 50EMA and RSI are signalling a bullish trend ahead. The 50EMA means the 50-period Exponential Moving Average, which means the average closing price of a stock over the previous 50 days. Also, the RSI is a relative strength index that measures the price momentum of a stock and if the RSI is below 30 it means that the stock is oversold and the indicator if above 70, means that it is overbought or overvalued.

The RSI of IRFC is currently favorable at 57.99, and its 50-EMA is at 141.86, as per Prabhudas Lilladher's data.

In its thematic report, Prabhudas said, "The stock has been in a rangebound consolidation period and once again from the level of 142 it has picked up to move past the important 50EMA level of 141.50 improving the bias and is anticipated to perform well in the coming days."

The brokerage added, "The RSI has shown improvement with a trend reversal indicated signaling a buy and has potential to carry on with the positive move further ahead. With the chart looking attractive, we suggest to buy the stock for an upside target of 195 level keeping the stop loss of 131 level."

Hence, Prabhudas keeps a target price of Rs 180 to Rs 195 on IRFC with a stop loss of Rs 131.

IRFC share price ended April month at Rs 157.25 apiece on BSE with a market cap of Rs 2,05,502.26 crore, making it the largest railway stock of India in terms of market share. On April 30th however, IRFC shares dipped by 2.2%.

The stock's 52-week high and low is at Rs 192.80 apiece and Rs 31.21 apiece respectively. YTD, the stock has gained by 57% on BSE, while in a year, the upside is around 369%, and in 5-years, IRFC shares have zoomed by 532.80% which is also its all-time gain.

Apart from Prabhudas' Rs 180 to Rs 195 target on IRFC, the stock is also seen to have the potential to hit the Rs 220 mark which will be its all-time high performance. The Rs 220 mark is likely possible when the share reaches over Rs 160 levels. The last time IRFC shares closed above Rs 160 levels was in the first week of February this year.

This Miniratna is the dedicated funding arm of Indian Railways. The primary objective of IRFC is to meet the predominant portion of the '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.

Notably, IRFC has also been lending to various entities in the Railway sector like Rail Vikas Nigam Limited (RVNL), Railtel, Konkan Railway Corporation Limited (KRCL), Pipavav Railway Corporation Limited (PRCL) etc.

IRFC will most likely announce its Q4 earnings in May month. during the third quarter of FY24, IRFC's profitability was a mixed bag with a decline on the YoY level but an upside on the QoQ front. In Q3FY24, the company registered a net profit of Rs 1,602.23 crore, down by 1.8% from PAT of Rs 1,633.45 crore in Q3FY23, but gained by 5.4% from the profit of Rs 1,549.87 crore in Q2FY24.

While in Q3FY24, IRFC's revenue was at Rs 6,741.86 crore, up by 8.4% YoY but down by 0.36% QoQ. The revenue was driven by interest income which came in at Rs 2,334.84 crore in Q3FY24.

Last year, IRFC paid a dividend of 15% amounting to Rs 1.5 per share.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.