IRFC Share Price Target 2024, 2025, 2026, 2027, 2030 Prediction: Buy or Sell?

IRFC shares are extremely popular with retail shareholders because of their low prices. But is the low price of IRFC shares a reason for you to invest your hard-earned money in the stock? In this article, let’s look at the IRFC Share Price Target 2024, 2025, 2026, 2027, 2030.

Indian Railway Finance Corporation Ltd. (IRFC) is a public sector enterprise that provides financial services to the Indian Railways, the largest rail network in the world.

In this blog post, we will analyze the performance, prospects, strengths, weaknesses, opportunities, and threats of IRFC shares. We will also look at the financials, risks, and key factors to watch out for in this stock.

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IRFC Share Price Target 2024, 2025, 2026, 2027, 2030, 2033

IRFC Share Price Live Chart and History

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IRFC Shares: Buy or Sell?

IRFC Financials

IRFC’s financial statements reflect its strong fundamentals and growth potential.

Over the span of five years, from Mar 2019 to Mar 2023, the financial performance of IRFC stock has shown notable growth:

1. Sales: There has been a steady increase in sales, with the numbers going from 11,134 in Mar 2019 to 23,892 in Mar 2023, showcasing a growth of more than 100% over five years.
2. Expenses: The expenses for the company, albeit low in relation to sales, have almost tripled over the 5-year period, increasing from 48 in Mar 2019 to 134 in Mar 2023.
3. Operating Profit: Consistent with the trend in sales, the operating profit has seen a significant uptick, moving from 11,085 in Mar 2019 to 23,757 in Mar 2023.
4. OPM % (Operating Profit Margin): The company has maintained a nearly flawless operating profit margin, hovering at around 99-100% over the past five years.
5. Other Income: While the other income was negligible from Mar 2019 to Mar 2021, there has been a noticeable increase in the last two years, reaching 41 in Mar 2023.
6. Interest: Interest has also surged over this timeframe, from 8,183 in Mar 2019 to 17,447 in Mar 2023.
7. Depreciation: Depreciation was zero until Mar 2020, but then began registering from Mar 2021 onwards, stabilizing at 14 in the last two years.
8. Profit Before Tax: The profit before tax has more than doubled from 2,902 in Mar 2019 to 6,337 in Mar 2023.
9. Tax %: The tax rate was 22% in Mar 2019 but has been consistently at 0% from Mar 2020 to Mar 2023.
10. Net Profit: The net profit has seen a significant upward trend, growing from 2,255 in Mar 2019 to 6,337 in Mar 2023.
11. EPS (Earnings Per Share) in Rs: The EPS has consistently grown over the years, rising from 2.4 in Mar 2019 to 4.85 in Mar 2023.

The IRFC stock’s financial performance has demonstrated steady growth in the span of five years, with an impressive increase in sales, operating profit, and net profit.

The consistent OPM% suggests efficient operational management, while the growth in EPS indicates potential value addition for shareholders.

IRFC Share Price Target 2024

In 2024, IRFC has a minimum share price target of ₹161.34, and the maximum share price target is ₹176.18.

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IRFC Growth Prospects

The Indian Railway Finance Corporation (IRFC) finds itself at the cusp of significant growth, closely tied to the expansive modernization and expansion efforts of the Indian Railways. As the Indian Railways undergoes a transformative phase, IRFC’s role and growth potential become increasingly pivotal. This analysis will explore the prospects of IRFC in the context of the Indian Railways’ development initiatives.

Indian Railways: A Snapshot

• Extensive Network: With 68,155 route kilometers, 7,321 stations, and a massive inventory of locomotives, coaches, and freight wagons, the Indian Railways is a vast and integral part of the country’s transport infrastructure.
• Daily Operations: It manages the gargantuan task of transporting 23 million passengers and 3.29 million tonnes of freight daily.

Key Modernization and Expansion Initiatives:

• Dedicated Freight Corridors (DFCs): Aimed at boosting freight capacity, projects like the Eastern and Western DFCs are set for completion soon, with more corridors like the East Coast, East-West, and North-South DFCs in the pipeline.
• High-Speed Rail (HSR) Projects: The introduction of HSR corridors, starting with the Mumbai-Ahmedabad project, signifies a leap in passenger transportation, with six additional corridors planned.
• Station Redevelopment: The initiative to modernize 400 stations, starting with Habibganj, underlines a move towards world-class facilities.
• Rolling Stock Acquisition: Plans to procure thousands of electric locomotives, passenger coaches, and freight wagons by 2024-25 indicate a substantial upgrade in capacity and efficiency.

IRFC’s Strategic Role:

• Sole Borrowing Entity: IRFC holds the exclusive authority to raise funds for the Indian Railways, positioning it as a key financial player in these expansion projects.
• Leasing and Financing: It plays a crucial role in leasing rolling stock assets and providing long-term financing, ensuring competitive rates and flexibility for the Indian Railways’ growth.

Growth Prospects for IRFC:

• Monopoly Position: IRFC’s unique positioning as the sole finance provider for the Indian Railways’ projects offers it a monopoly in its business segment.
• Captive Customer Base: With the Indian Railways as its primary customer, IRFC’s growth is inherently linked to the latter’s expansion and modernization.
• Revenue and Profitability: As the Indian Railways grows, IRFC is poised for parallel growth in revenue and profitability, benefiting from the railway sector’s massive investment plans.

Conclusion: The IRFC’s growth trajectory is closely intertwined with the Indian Railways’ ambitious expansion and modernization drive. With the railway sector set to witness monumental investments and developments, IRFC stands to gain significantly, bolstered by its monopoly status and critical role in financing these initiatives. This makes IRFC a key entity in the landscape of Indian infrastructure development, with promising prospects ahead.

IRFC Share Price Target 2025

For 2025, IRFC has a minimum share price of ₹201.68, while the maximum share price target is ₹220.23.

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IRFC Valuation

IRFC’s valuation can be assessed using various methods, such as price-to-earnings ratio (P/E), price-to-book value ratio (P/B), dividend yield, discounted cash flow (DCF), etc.

IRFC Share Price PE Ratio

P/E Ratio: This is the ratio of the share price to the earnings per share. It indicates how much an investor is willing to pay for a rupee of earnings. A higher P/E ratio implies a higher valuation, and vice versa.

IRFC’s trailing twelve-month (TTM) P/E ratio as of July 2023 was 10.01, which was lower than its five-year average P/E ratio of 10.25. This implies that the stock was undervalued compared to its historical average.

IRFC’s forward P/E ratio based on estimated EPS for FY23 was 9.57, which was lower than its TTM P/E ratio. This implies that the stock was expected to grow its earnings faster than its price.

IRFC Share Price PB Ratio

P/B Ratio: This is the ratio of the share price to the book value per share. It indicates how much an investor is willing to pay for a rupee of net assets. A higher P/B ratio implies a higher valuation, and vice versa.

IRFC’s TTM P/B ratio as of July 2023 was 1.53, which was lower than its five-year average P/B ratio of 1.58. This implies that the stock was undervalued compared to its historical average.

IRFC’s forward P/B ratio based on the estimated book value per share for FY23 was 1.46, which was lower than its TTM P/B ratio. This implies that the stock was expected to grow its net assets faster than its price.

Dividend Yield: This is the ratio of the annual dividend per share to the share price. It indicates how much an investor can earn from holding a share for a year. A higher dividend yield implies a higher return, and vice versa.

IRFC’s TTM dividend yield as of July 2023 was 4.18%, which was higher than its five-year average dividend yield of 3.95%. This implies that the stock was offering a higher return compared to its historical average.

IRFC’s forward dividend yield based on the estimated dividend per share for FY23 was 4.31%, which was higher than its TTM dividend yield. This implies that the stock was expected to increase its dividend payout in the future.

DCF: This is a method of valuing a company by estimating its future cash flows and discounting them to their present value using an appropriate discount rate. The present value of the future cash flows represents the intrinsic value of the company.

We used a two-stage DCF model to estimate IRFC’s intrinsic value. We assumed that IRFC’s FCF would grow at a rate of 15% for the next five years (2023-2027) and then at a terminal growth rate of 5% thereafter (2028-2032). We used a weighted average cost of capital (WACC) of 9% as the discount rate.

Based on these assumptions, we calculated IRFC’s intrinsic value at Rs. 83,621 crore, or Rs. 64.6 per share.

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IRFC Share Price Target 2026

In 2026, IRFC has a minimum share price target of ₹252.09, and the maximum share price target is ₹275.28.

Strengths and Weaknesses of IRFC Share

IRFC stock has several strengths and weaknesses that investors should consider before buying or selling it. Here are some of the main ones:

Strengths of IRFC Stock:

• Monopoly Position: IRFC has a monopoly position in its business segment of providing financial services to the Indian Railways. IRFC is the sole entity authorized by the Ministry of Railways to borrow funds from the market on behalf of the Indian Railways. This gives IRFC a competitive edge and a stable source of revenue and profitability.
• Captive Customer Base: IRFC has a captive customer base in the form of the Indian Railways, which is the largest rail network in the world and the lifeline of the country’s economy and transportation. The Indian Railways has a huge demand for funds for its various projects, such as rolling stock acquisition, railway infrastructure development, and leasing of assets. IRFC caters to this demand by providing long-term financing at competitive rates and flexible terms. IRFC also earns leasing income from leasing assets to the Indian Railways.
• Growth Potential: IRFC has immense growth potential as it is linked to the growth and development of the Indian Railways, which is undergoing a massive modernization and expansion program. The government of India has announced plans to invest Rs. 30 lakh crore in the railway sector by 2024-25. Some of the key projects include dedicated freight corridors, high-speed rail, station redevelopment, and rolling stock acquisition. IRFC is expected to benefit from these projects as it will provide funds and lease assets to the Indian Railways.
• Strong Fundamentals: IRFC has strong fundamentals that reflect its financial strength and operational efficiency. IRFC has shown consistent growth in its revenue and profitability over the past five years and has maintained impeccable asset quality and capital adequacy. IRFC also offers a high dividend yield to its shareholders.

Weaknesses of IRFC Stock:

• Regulatory Risk: IRFC faces regulatory risk as it is subject to the policies and regulations of the government of India and the Ministry of Railways. Any changes in these policies and regulations could affect IRFC’s business operations and financial performance. For example, any changes in the interest rates, tax rates, borrowing limits, lending terms, or leasing terms could impact IRFC’s revenue and profitability.
• Market Risk: IRFC faces market risk as it borrows funds from various sources, such as banks, financial institutions, bonds, commercial papers, etc. Any fluctuations in the interest rates, exchange rates, or credit ratings could affect IRFC’s cost of borrowing and repayment obligations. For example, any increase in the interest rates or depreciation of the rupee could increase IRFC’s interest expenses and reduce its net profit margin.
• Competition Risk: IRFC faces competition risk as it operates in a dynamic and competitive environment. Although IRFC has a monopoly position in its business segment, it could face competition from other players in the future who may offer better products or services to the Indian Railways or other customers. For example, other public sector enterprises, private sector enterprises, or foreign entities could enter the market and challenge IRFC’s dominance.
• Volatility Risk: IRFC faces volatility risk as its share price performance has been volatile since its listing. The stock has witnessed significant fluctuations, ranging from a low of Rs. 20.8 to a high of Rs. 52.7 in the past year. The stock price could be affected by various factors, such as market sentiment, investor expectations, news events, etc. For example, any positive or negative news about the Indian Railways or IRFC could impact the stock price.

These are some of the strengths and weaknesses of IRFC stock that investors should be aware of before making any investment decisions. Investors should also do their own research and analysis before buying or selling IRFC shares.

IRFC Share Price Target 2030

Looking ahead to 2030, IRFC has a minimum share price target of ₹615.46, along with a maximum share price target of ₹672.07.

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Closing Thoughts on IRFC Share Price Target 2025, 2027, 2030 and 2033

IRFC is a unique and attractive investment opportunity for long-term investors who are looking for steady and stable returns with low risk.

IRFC has a monopoly position in its business segment and a captive customer base in the form of the Indian Railways, which is undergoing a massive modernization and expansion program.

IRFC has shown consistent growth in its revenue and profitability over the past five years and has maintained impeccable asset quality and capital adequacy. IRFC also offers a high dividend yield to its shareholders.

Based on our analysis, we believe that IRFC is undervalued at its current price and has significant growth potential in the future.

The IRFC Share Price Target for the next 10 years looks promising and has the potential to give 300% returns over the current share price.

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FAQs on IRFC Share Price Target 2024, 2025, 2027, 2030 and 2033

What is the IRFC Share Price Target 2024?

As per our analysis and analyst recommendations, The IRFC Share Price Target 2024 is expected to be between ₹161.34 and ₹176.18, backed by a strong outlook and performance.

What is the IRFC Share Price Target 2025?

As per the growth opportunities available, The IRFC Share Price Target 2025 is expected to be between ₹201.68 and ₹220.23. IRFC shares are expected to continue their strong momentum from 2024, giving excellent returns to its shareholders.

What is the IRFC Share Price Target 2026?

Over medium term, The IRFC Share Price Target 2026 is expected to be between ₹252.09 and ₹275.28. IRFC shares are expected to do well in 2026 with a positive outlook.

What is the IRFC Share Price Target 2030?

Over the long term, The IRFC Share Price Target 2030 is expected to be between ₹615.46 and ₹672.07. IRFC shares are expected to do well over the long term.