Incorporated in 1986, Indian Railway Finance Corporation Limited (IRFC) is a
dedicated market borrowing arm of Indian Railways. Their primary business is
financing the acquisition of rolling stock assets, which includes both powered and unpowered vehicles.
Outlook & Valuation: 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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