Indian Railway Finance Corp (IRFC): Top Railway Stock Is Undervalued, Falls By 34% From 52-Week High; Buy/Sell

Indian Railway Finance Corporation (IRFC), India's largest rail stock in terms of market value, extended its selling pressure for second straight session on October 3. On Thursday, the stock dipped by at least 2.5% to reach a little over Rs 151 levels. However, the stock has corrected steeply by 34% from 52-week high. Is IRFC stock undervalued, and should investors buy or sell?

IRFC Share Price:

The large-cap railway stock dived by 2.47% to hit an intraday low of Rs 151.50 apiece on BSE. Meanwhile, at the time of writing, IRFC shares shed over 2% to trade at Rs 152.15 apiece which is also near its day's low. The company's market cap is around Rs 1,98,902.66 crore.

In the previous session, IRFC stock fell by over 2.14%.

At the latest intraday low, IRFC shares have nosedived by 33.85% from its 52-week high of Rs 229.05 apiece. While the stock is trading more than double the 52-week low level of Rs 65.75 apiece.

YTD, IRFC stock is up by 51.51%.

Is IRFC Stock Undervalued?

As per Alpha Spread data, The intrinsic value of one IRFC stock under the Base Case scenario is 163.9 INR. Compared to the current market price of 152.19 INR, Indian Railway Finance Corp Ltd is Undervalued by 7%.

In technical terms, as per Trendlyne data, IRFC shares are trading below 8 out of 8 SMAs. The 200-Day, 150-Day, and 50-Dau SMA of IRFC shares are at Rs 158.3, Rs 167.0, and Rs 175.3 respectively.

SMA is simple moving average (SMA) which takes into account the closing price of a listed company over a specified period of time. As per Angel One website, it can act as a useful indicator of where its price direction is headed for the future. It smoothes the price action and gives traders a clear idea of the overall price trend of the security.

Also, IRFC shares are trading below 4 out of 9 Oscillators in bearish zone. The resistance level for IRFC stock is around Rs 157 to Rs 161. While its support level is around Rs 150 to Rs 154.

Among positive fundamentals, as per Trendlyne, IRFC stock rose 98.76% and outperformed its sector by 57.05% in the past year, while its Return on Equity(ROE) for the last financial year was 13.03%, in the normal range of 10% to 20%. Further, Promoter Pledges are zero.

However, in case of the red zone for IRFC is that the company's Debt to Equity Ratio of 8.38 is higher than 1, implying that company assets are financed through debt. Also, the Price to price-to-earning ratio is 30.84, higher than its sector PE ratio of 20.51.

BUY/SELL IRFC?

Anshul Jain, head of research at Lakshmishree recently said, that IRFC, which surged following the budget, is now facing a significant correction. Analysts predict a sharp pullback of nearly 50% from its recent highs, with the price likely to drop to the ₹115-₹125 range. Such corrections are common after strong rallies, and this may be an opportune time for short-term investors to consider exiting the stock, as reported by Benzinga India.

Also, in August 2024 month, Prabhudas Lilladher recommended BUY on IRFC for target prices of Rs 230-250 keeping the stop loss of 164.

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