The Indian Railway Finance Corporation Ltd (IRFC), a powerhouse in the Indian market with a market cap of nearly ₹1,23,759 crore, has sent investors on a thrill ride this year. Delivering a staggering 180% return in just one year, IRFC has become a hot topic for both seasoned and aspiring investors. But the question remains: is this surge a sustainable climb or a temporary flash in the pan?
Daily Chart Insights: Riding the Rollercoaster of Growth
A glance at the daily chart reveals a skyrocketing trajectory throughout the year.
Starting the year at around 33 rupees per share in January 2023, the stock witnessed a remarkable ascent, reaching over 95 rupees per share by December 2023, delivering an extraordinary 180% return for investors. On December 15, 2023, the stock approached the significant 100 rupee mark but faced a temporary setback, marked by a bearish closing as profit booking took center stage. Evaluating the sustainability and consolidation above the 100 rupee mark becomes crucial, as it holds the potential to signal a prolonged surge in the stock’s performance.
Second Quarter Results FY 2023-24
Despite a slight dip in net profit, IRFC showcased resilience in its revenue from operations during the July-September quarter of the fiscal year 2023-24. The profit after tax declined from ₹1,714.28 crore to ₹1,549.87 crore compared to the same period the previous year. On a positive note, the revenue from operations witnessed a substantial 16% increase, climbing from ₹5,809.8 crore to ₹6,766.32 crore. The company also declared an interim dividend of ₹0.8 per equity share of ₹10, solidifying its commitment to shareholders. While short-term fluctuations are inevitable, the broader fundamentals of IRFC remain robust.
Strong Linkage with the Government of India
IRFC’s unique strength lies in its close association with the Government of India. The Government of India’s active involvement in appointing the board of directors and steering the company’s strategic direction underscores the robust governance structure. Additionally, the company transfers significant financial risks, such as interest rate and exchange rate variations, onto the Ministry of Railways. This symbiotic relationship with the government adds a layer of stability to IRFC’s operational and financial endeavors.
With its strong performance, robust finances, and ambitious growth plans, IRFC shares offer an enticing investment opportunity. The recent uptick in stock prices, coupled with solid fundamentals, paints an optimistic picture. Yet, as with any investment, thorough research is essential. Consult a financial advisor to ensure IRFC aligns with your goals and risk tolerance.
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