As the public sector NBFC Indian Railways Finance Corporation (IRFC) opens its IPO issue, here are some of the experts with their views on the first PSU NBFC IPO:
The issue size of the IRFC IPO is Rs. 4633 crore and with a price band of Rs. 25-Rs. 26, many investors will try their bet on the issue, nonetheless as per experts' view with a high valuation, the price of such an issue is unlikely to move very swiftly.
1. Central government company with strong financials:
The AAA rated company has a strong financial position with clear revenue and profitability for the next few years.
2. Government has segregated operational and financial entity of Indian railways:
This stance ensures that fund management is optimal. Notably, IRFC is the financier for Indian Railways and after understanding the requirement of Indian railways it provides with the funds adding its own margin. And this ensures that IRFC's earnings via interest income remains intact.
3. Valuation of IRFC much reasonable in comparison to other NBFCs:
NBFCs and other financial companies are valued based on price to book value. IRFC being a AAA rates is being offered at book value at reasonable valuations and P/E multiple of the company is around 8-9.
How IRFC may move in the near term?
As because of its high issue size, until the stake of 75% in the company is divested, the scrip of IRFC is unlikely to see sharp upmove in the near term. Through the current offering, the government's stake in the firm will come down to 86.4%.
Listing gains from IRFC if any?
Now for the issue, the attractively valued IRFC issue can be subscribed for long term and listing gains of very high quantum i.e. 40-50% are not expected. And though, investors in the issue can expect double the returns from bank fixed deposit of 12-15%.