IRFC IPO: Key Updates
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Company Information
Indian Rail Finance Corporation (IRFC), incorporated in 1966, is the dedicated market borrowing arm of the Indian Railways. It primarily deals with financing the assets of the Indian Railways and lending to other entities under the Ministry of Railways. It takes care of these financial needs by raising capital for expansion through capital markets and other borrowings. In the last fiscal, 2019, IRFC financed ₹525.35 billion accounting for 39.38% of the actual capital expenditure of the Indian Railways.
Primary business activities performed by IRFC:
- Financing rolling stock assets, which includes both powered and unpowered vehicles, (locomotives, coaches, wagons, trucks, flats, electric multiple units, containers, cranes, trollies)
- Leasing of railway infrastructure assets and national projects of the Government of India (collectively, Project Assets) and
- Lending to other entities under the Ministry of Railways, Government of India
Competitive Strengths
- Strategic role in financing growth of Indian Railways
- Competitive cost of borrowings based on strong credit ratings in India and diversified sources of funding
- Low risk business model, exclusive partnership with Ministry of Railways
- Strong asset-liability management
- Experienced senior management and committed team
Company Strategy
- Diversification of borrowing portfolio
- Broaden the financing portfolio
- Continued focus on asset-liability management
- Provide advisory and consultancy services and venture into syndication activities
- Stable and long-term Leasing Operations
Proceeds from the IPO will be used to:
- Augment IRFC’s equity capital base to meet future capital requirements
- General corporate purposes
Financial Performance:
| 2017 | 2018 | 2019 (Mar) | 2019 (Sep) | |
|---|---|---|---|---|
| Revenue from Ops | 8,013.79 Cr | 9,268.38 Cr | 11,133.59 Cr | 6,661.29 Cr |
| Profit after Tax | 9,211.71 Cr | 2,049.09 Cr | 2,254.66 Cr | 1,714.80 Cr |
| EPS (Basic) | 3.07 | 3.26 | 3.40 |
| Price to Earnings (P/E) | 2020 |
|---|---|
| P/E at Lower End of Price Band | 7.35 |
| P/E at Higher End of Price Band | 7.65 |
IRFC IPO Dashboard
Issue Details
| Type | Value |
|---|---|
| Issue Size | ₹4,633.38 Cr |
| Fresh Issue | ₹3,088.92 Cr |
| offer for Sale | ₹1,544.46 Cr |
| Face Value | ₹10/- per Equity Share |
| IPO Price | ₹25- ₹26 |
| Lot Size | 575 |
| Lots | Min 1 – Max 13 |
Key Dates
| Date Type | Date |
|---|---|
| Bid Open | 18/01/2021 |
| Bid Close | 20/01/2021 |
| Allotment Finalization | 25/01/2020 |
| Initiation of Refunds | 27/01/2020 |
| Credit of Shares | 28/01/2020 |
| Listing Date | 29/01/2021 |
Lot Size and Price
| Lots | Shares | Amount |
|---|---|---|
| 1 | 575 | ₹14,950 |
| 13 | 7475 | ₹1,94,350 |
Promoter Holding
| Holding | Percentage |
|---|---|
| Pre-Issue | 100% |
| Post – issue | 86.4% |
IRFC IPO: Investor Quota and Shares Offered
| Investor Type | Quota | Shares on Offer |
|---|---|---|
| QIB | 50% | 35,63,75,339* |
| NII | 15% | 26,72,81,504 |
| RII (Retail) | 35% | 62,36,56,843 |
| Employee | – | 1,92,307 |
| Total | 100% | 1,24,75,05,993 |
Actual QIB portion – 89,10,34,50 shares
IRFC IPO – Risks
- A significant amount of the revenue is from the Indian Railways and a loss of or reduction in business from the Indian Railways could have an adverse effect on the business.
- Ability to operate efficiently is dependent on its ability to maintain diverse sources of funds and at a low cost. Any disruption in the funding sources or any inability to raise funds at a low cost could have a material adverse effect
- In the event the margin on the Rolling Stock Assets leased to the MoR by the Company is not favourable, it may have an adverse impact on the financial condition and results of operation.
- Mismatch in the tenor of its leases and borrowings may lead to reinvestment and liquidity risk, which may adversely impact its financial condition and results of operations
For complete internal and external risk factors, you can refer the DRHP of the company.
IRFC IPO: Registrar and Lead Managers
Registrar of the Issue
KFintech (Formerly Karvy)
Selenium Building, Financial District, Nanakramguda, Serilingampally,
Rangareddi, Telangana India – 500 032.
Phone:+91-40-67162222/79611000
Email:[email protected]
Lead Managers of the Issue
- HSBC Securities & Capital Markets Pvt. Ltd
- ICICI Securities Limited
- IDFC Bank Limited
- SBI Capital Markets Limited
