IRFC has posted strong growth in operating income of
20.7% CAGR between FY18-20 while net profits have grown at a CAGR of
26.3% during the same period. Company is unlikely to face any asset quality
issues given the fact that the company caters to the Government of India. At the
higher end of the price band the stock would be trading at P/BV of 1.0x fully
diluted post issue book value of 26.6 per share. We expect the company to
post strong growth driven by capex by Indian railways along with stable
margins due to cost plus model. Given the growth prospects, we recommend a
SUBSCRIBE rating on the issue.

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