IPO note – Indian Railway Finance Corporation Limited

Indian Railway Finance Corporation Limited IPO

Indian Railway Finance Corporation Limited (IRFCL) is the dedicated market borrowing arm of Indian Railways. IRFCL’s primary objective is financing the acquisition of rolling stock assets, which includes powered and unpowered vehicles, leasing of railway infrastructure assets and national projects of the Government of India and lending to other entities under the Ministry of Railways, Government of India.

Over the past three decades, IRFCL has financed a large proportion of capacity enhancement for Indian Railways. For instance, in fiscal 2020, IRFCL sponsored approx. 48.2% of actual capital expenditure of Rs 1.5 trillion incurred by the Indian Railways. The company is currently a wholly-owned subsidiary of the Government of India and registered as Non-Banking Financial Company.

Key strengths:

  1. Plays a strategic role in the growth of Indian railways
  2. Competitive cost of borrowing due to strong credit ratings, especially being a government enterprise
  3. Operates on a cost-plus model and has delivered consistent and robust financial performance
  4. Low-risk business model as IRFCL works with the Government of India and Ministry of Railways on the expansion of rail infrastructure
  5. Highly experienced senior management team

Amount in Rs CrIndian Railway Finance Corporation IPO

  • Continuous growth in revenues
  • Significantly robust margins and return ratios

Offer and Deployment of Net Proceeds

Particulars Amount (Rs Cr)
Fresh Issue of 1,188,046,000 shares Rs 3,089 Crs
Offer for Sale of 594,023,000 shares Rs 1,544 Crs

Deployment of funds

  • Augmenting the equity capital base to meet the future capital requirements to support the growth in business
  • General corporate expenses

Quick IPO Facts

IRFCL IPO Snapshot

Here is the LINK to the BSE website to check share allotment status.

Conclusion thoughts:

  • A continual increase in allocation to railways expenditure during the Union budgets plays to the advantage of IRFCL
  • Fiscal 2021 allocation of Rs 1.6 trillion (vs Rs 1.5 trillion during Fiscal 2020) was highest ever, and we expect the budgetary allocations to continue to increase in future
  • No listed company in a similar line of business with the Ministry Railways, this fact provides a strong support to IRFCL business
  • India has one of the lowest rail route kilometers per million population internationally. Expansion of rail network is imperative and will be positive for IRFCL
  • Strong financials and cost-plus model leading to robust margins


The information provided in red herring prospectus filed with the Securities and Exchange Board of India (www.sebi.gov.in) is the basis for this note. However, I recommend the reader to validate the data before making any financial decision. Also, investment in an initial public offering (IPO) is subject to market risks and should be evaluated, keeping your risk profile and investment objective in mind. The author will not be responsible for any financial loss or otherwise resulting from any action taken based on the above.

The author is a senior finance professional with over fifteen years of work experience in corporate finance and has an affinity for personal finance and investment management. Please leave your comment or share thoughts on this article via email at decodefinance.in@gmail.com. For more articles, please visit the website www.decodefinance.in


The author has used his knowledge, experience, and understanding of the subject to write this article. Any views, opinions, and thoughts mentioned in the article belong solely to the author, and not necessarily to the author’s employer (past or current), organization, committee, or other group or individual.

Under no circumstances the author shall be liable for any views or analysis expressed in this note. Further, the opinions expressed are not binding on any authority or Court. We advise readers to consult their financial advisor for assistance in their specific case.

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3 Replies to “IPO note – Indian Railway Finance Corporation Limited”

  1. Thank you sharing some good insight about IRFCL..I never new there an govt.of india NBFC to finance indian railways.

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