The initial public offering (IPO) of Indian Railway Finance Corporation (IRFC) was launched in January 2021, which became a significant event in the Indian capital market. This IPO was not only going to advance the strategy of privatization of government undertakings but also opened the door to financial opportunities related to railway infrastructure for investors. In this article, we will present an in-depth review of IRFC IPO, including its performance, expert opinion, investment risks and opportunities, and long-term prospects.
IRFC IPO: Basics and Key Statistics
IRFC, the premier financial institution providing financial support to the Indian Railways, launched its IPO at a price of ₹26-₹26 per share. It aimed to raise a total capital of Rs 1,190 crore, with the government selling 13.90 crore shares. The IPO was entirely based on OFS (Offer for Sale), which means that instead of raising fresh capital, the government sold its stake.
Subscription Status and Initial Response
- QIB (Qualified Institutional Buyers): 14.64 times
- NII (Non-Institutional Investors): 3.49 times
- Retail Investors: 3.49 times
- Total Subscription: 3.49 times
This data shows that institutional investors showed special interest in this IPO, while the response from retail investors was moderate.
Expert Opinion: What do market analysts say?
1.Safe investment option:
Financial experts such as Saurabh Jain (Motilal Oswal) and CA Jeevak Amin term IRFC a “low-risk investment” as it relies on government guarantees and the railways’ stable revenue model.
2. Doubts on long-term growth:
Some analysts, such as Sandeep Grover (HDFC Securities), have expressed concern that IRFC’s revenue comes mainly from interest on railway loans, which may limit the pace of growth.
3. Attractiveness of dividend yield:
IRFC has paid regular dividends in the past years. According to Moneycontrol, its dividend yield in 2023 was 5.2%, which offers better returns than FDs.
Post Listing Performance: Did IRFC stock live up to expectations?
IRFC stock listed on BSE and NSE on 29th January 2021 at ₹25.55 against the issue price of ₹25.65, which was a disappointing debut. However, it has shown stability over time:
- After 6 months: ₹28.50 (11% return)
- After 1 year: ₹32.40 (26% return)
- Current price (2023): Around ₹45-₹50 (around 80% gain)
This performance shows that patient investors got good returns, but short-term traders were disappointed.
Comparative Analysis: IRFC with other Government IPOs
| Company | IPO Price (₹) | Current Price (₹) | Return (%) |
| IRFC | 26 | 48 | 84.6% |
| RAILTEL | 94 | 155 | 64.8% |
| IRCTC | 320 | 850 | 165.6% |
| LIC | 949 | 650 | -31.5% |
This comparison shows that IRFC performed better than other government IPOs like LIC, but lagged behind companies like IRCTC.
Advantages and Disadvantages of Investment
Advantages:
- Government Banking: Backing from Government of India reduces risk.
- Steady Income: Fixed interest income from railway loans.
- Dividend Yield: Regular and attractive dividends.
Disadvantages:
- Limited Growth: Lack of diversity in revenue model.
- Market Volatility: Impact of policy changes in the infrastructure sector.
Frequently Asked Questions (FAQs)
Is IRFC IPO still worth buying?
Yes for long-term investors, as it offers stable returns and low risk.
Who are IRFC’s competitors?
Government financial institutions like REC, PFC, and LIC.
Can IRFC stock reach ₹100 by 2025?
Analysts believe this is possible if the railways continue to expand.
Conclusion: Is IRFC IPO a good investment?
IRFC IPO is suitable for investors who want stability and government protection. However, those expecting high growth should consider other options. At current prices, this stock can be a balanced portfolio addition for the medium-to-long term.
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