Railway financing PSU is looking to raise ~₹ 4,633 crores through capital markets.
Indian Rail Finance Corporation Ltd. (IRFC), a Govt of India PSU established in 1986 is dedicated market borrowing arm of the Indian Railways. It is registerd with RBI as an NBFC-ND-IFC (NBFC - Non-deposit taking). IRFC is primarily engaged into financing the acquisition of Rolling stock Assets and Project Assets of Indian Railways and lending to other entities under Ministry of Railways.
IPO issue would start for subscription on 18-Jan-21 till 20-Jan-21 with price band of ₹ 25 to ₹ 26 per share.
IRFC follow a financial leasing model for financing the Rolling Stock Assets. The period of lease with respect to Rolling Stock Assets is typically 30 years comprising a primary period of 15 years followed by a secondary period of 15 years, unless otherwise revised by mutual consent.
In Fiscals 2017, 2018, 2019 and 2020 (revised estimate), financing 72%, 93%, 84% and 76%, respectively, of the rolling stock purchased and leased to the MoR (Source: Ministry of Railways).
The total value of Rolling Stock Assets financed as of March 31, 2020 and as of September 30, 2020 was ₹ 2,238,107.84 million and ₹ 2,346,271.68 million, respectively, while the value of Rolling Stock Assets financed in Fiscal 2020 and in the six months ended September 30, 2020, was ₹ 335,441.09 million and ₹ 108,163.84 million, respectively.
Through this IPO, IRFC is looking to raise ₹ 4,633 Crores primarily 1) Augmenting equity capital base to meet future capital requirements arising out of growth in business; 2) General corporate purposes.
In Fiscals 2017, 2018, 2019 and 2020 (revised estimate), financing 72%, 93%, 84% and 76%, respectively, of the rolling stock purchased and leased to the MoR (Source: Ministry of Railways).
The total value of Rolling Stock Assets financed as of March 31, 2020 and as of September 30, 2020 was ₹ 2,238,107.84 million and ₹ 2,346,271.68 million, respectively, while the value of Rolling Stock Assets financed in Fiscal 2020 and in the six months ended September 30, 2020, was ₹ 335,441.09 million and ₹ 108,163.84 million, respectively.
Through this IPO, IRFC is looking to raise ₹ 4,633 Crores primarily 1) Augmenting equity capital base to meet future capital requirements arising out of growth in business; 2) General corporate purposes.
The Indian Railways has deployed 12,147 locomotives, 67,597 passenger service vehicles, 289,185 wagons and 6,406 other coaching vehicles as of March 31, 2019. (Source: Indian Railways - Year Book 2018-19, Ministry of Railways) There were 7,318 (revised) and 7,321 railway stations in India as of March 31, 2018 and as of March 31, 2019, respectively (Source: Indian Railways – Year Book 2018-19, Ministry of Railways).
Promoters of IRFC is President of India, acting through the Ministry of Railways.
Total revenue from operations increased by 19.33% from ₹ 92,078.39 million in Fiscal 2018 to ₹ 109,873.55 million in Fiscal 2019 and by 22.15% to ₹ 134,210.90 million in Fiscal 2020, and was ₹ 73,848.29 million in the six months ended September 30, 2020. In Fiscals 2018, 2019 and 2020, and the six months ended September 30, 2020, profit for the period was ₹ 20,014.60 million, ₹ 21,399.33 million, ₹ 31,920.96 million and ₹ 18,868.41 million, respectively.
AUM, which represents sum of total lease receivables, loans to Other PSU Entities, and advances against leasing of Project Assets, have grown by 30.03% from ₹ 1,545,346.66 million as of March 31, 2018 to ₹ 2,009,373.33 million as of March 31, 2019 and by 32.45% to ₹ 2,661,369.90 million as of March 31, 2020, and was ₹ 2,780,075.92 million in the six months ended September 30, 2020.
Disbursements to the MoR increased by 43.06% from ₹ 367,222.50 million in Fiscal 2018 to ₹ 525,351.84 million in Fiscal 2019 and by 35.89% to ₹ 713,920.69 million in Fiscal 2020, and was ₹ 190,163.84 million in the six months ended September 30, 2020.
Our capital adequacy ratio as of March 31, 2020 and September 30, 2020 was 395.39% and 433.92%, respectively. As of September 30, 2020, we did not have any non-performing assets.
AUM, which represents sum of total lease receivables, loans to Other PSU Entities, and advances against leasing of Project Assets, have grown by 30.03% from ₹ 1,545,346.66 million as of March 31, 2018 to ₹ 2,009,373.33 million as of March 31, 2019 and by 32.45% to ₹ 2,661,369.90 million as of March 31, 2020, and was ₹ 2,780,075.92 million in the six months ended September 30, 2020.
Disbursements to the MoR increased by 43.06% from ₹ 367,222.50 million in Fiscal 2018 to ₹ 525,351.84 million in Fiscal 2019 and by 35.89% to ₹ 713,920.69 million in Fiscal 2020, and was ₹ 190,163.84 million in the six months ended September 30, 2020.
Our capital adequacy ratio as of March 31, 2020 and September 30, 2020 was 395.39% and 433.92%, respectively. As of September 30, 2020, we did not have any non-performing assets.
About Industry
The Indian Railways is the largest rail network in Asia, running approximately 13,452 trains every day to transport approximately 22.70 million passengers per day in Fiscal 2018 (Source: http://indianrailways.gov.in/railwayboard/view_section_new.jsp?lang=0&id=0,1,261 and Indian Railways -Year Book 2017-18, Ministry of Railways). The MoR has made substantial progress in initiating infrastructure creation. The Indian Railways has planned to borrow ₹ 2.50 trillion from IRFC to fund its proposed capital expenditure from Fiscal 2016 to Fiscal 2020 (Source: Ministry of Railways). In particular, the MoR has indicated its intention to borrow ₹ 554.71 billion from IRFC in Fiscal 2020 (Source: Ministry of Railways).
Key Pointers
- Low risk business model of leasing
- Financed ~76% of the rolling stock leased to MoR
- Consistent financial performance and cost plus model
- Extend debt financing to other PSU
- Competitive cost of borrowings based on strong credit ratings in India and diversified sources of funding
- Strategic role in financing growth of Indian Railways
Key Management
| Amitabh Banerjee | CMD |
| Shelly Verma | Director (Finance) & CFO |
| N.H. Kannan | General Manager (Finance) |
| Rahul Kumar Maurya | Joint General Manager (Human Resource Management) |
| Ashutosh Samantaray | Additional General Manager (Finance) |
| Vijay Babulal Shirode | CS & Compliance Officer |
IRFC IPO Snapshot
| Issue Open | 18-Jan-2021 |
| Issue Close | 20-Jan-2021 |
| Face Value | ₹ 10/- |
| Price Band | ₹ 25 to ₹ 26 (Including premium of ₹ 15 to ₹ 16 per share) |
| Discount | Nil |
| Bid Lot | 575 shares and in mutiples |
| Listing on | BSE and NSE |
| Mode of Payment | UPI / ASBA (Mandatory); Applications using third party UPI/ASBA Bank accounts are liable to rejected |
IRFC Issue & Subscribed Details
| Particulars | Issued | Subscribed |
|---|---|---|
| Issue Size | ₹ 4,633 Crores (Upper Band) | ₹ - Crores |
| QIB Portion | ~50% | 3.78 times |
| NII Portion (Application for lot size of 15 & above) | ~15% | 2.67 times |
| Retail Portion (Applications for lot size between 1 & upto 15) | ~35% | 3.66 times |
| Employees Portion | Upto ₹ 0.5 Crores | 43.76 |
| Total | 100% | 3.49 times |
IRFC IPO Indicative Dates
| Issue Open | 18-Jan-2021 |
| Issue Close | 20-Jan-2021 |
| Anchor Investor Bidding | One working day prior to Issue opening date of 18-Jan-2021 (around 15-Jan-2021) |
| Announcement of Allotment | 25-Jan-2021 |
| Initiation of Refunds | 27-Jan-2021 |
| Credit of Shares | 28-Jan-2021 |
| Listing (Commencement of trading on Stock Exchanges) | 29-Jan-2021 |
Lead Managers of IRFC IPO
List of Book Running and Lead/Co-Lead Manager/s
| DAM Capital Advisors Ltd.(Erstwhile IDFC Securities Ltd.) |
| HSBC Securities & Capital Markets (India) Pvt. Ltd. |
| ICICI Securities Limited |
| SBI Capital Markets Ltd. |
Registrar of IRFC IPO
| KFIN Technologies Private Limited |
Valuation
Company is looking at the following valuation
| Issue Size | ₹ 4,633 Crores (Upper Band |
| Pre-Issue Promoter's Holding | 100% |
| Post Issue Promoter's Holding | ~86.4% |
| Pre-Issue Shares | 1,188.04 Crores |
| Post Issue Shares | 1,306.85 Crores |
| Post Issue Market Cap (based on Price band) | ₹ 32,671 to ₹ 33,978 Crores |
Address of IRFC
| Name | Indian Railway Finance Corporation Limited |
| Corporate Identity Number | U65910DL1986GOI026363OUR |
| Contact Person | Vijay Babulal Shirode, Company Secretary and Compliance Officer |
| Registered and Corporate Office | UG-Floor, East Tower, NBCC Place, Bisham Pitamah Marg, Pragati Vihar, Lodhi Road, New Delhi – 110 003; Te l: +91 (11) 2436 9766 |
| Website | www.irfc.nic.in |
| dgmcs@irfc.nic.in |
Check Allotment Status of IRFC IPO
| Please check below or visit here to check allotment status of IPO |
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Frequently Asked Questions (FAQ)
| Q. How to Apply for IPO ? A. IPO can be applied Online and Offline mode. Online: a) Via Net banking of Bank website b) Via Stock brokers portal Offline: a) Collect application forms from Brokers > Fill demat details & UPI > Submit to any broker across India. b) Download forms from NSE/BSE website > Fill demat details & UPI > Submit to any broker across India. |
| Q. How to register for BHIM UPI? UPI is made mandatory by SEBI to apply for IPO's. To educate investors National Payment Corporation of India (NPCI) has come out with the useful video. This video educates on how to download BHIM UPI app and its process to register. Source: NPCI |
| What is UPI based ASBA Process ? To educate people to apply for IPO's National Payment Corporation of India (NPCI) has come out with the useful video. This video educates consumers on how the IPO process works and how subscribing for IPOs via BHIM UPI helps reduce the time and effort one needs to take for the same. Source: NPCI |
| Q3? Ans Source: NPCI |
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