Indian Railway Finance Corporation Limited

Financial Services — Credit Services · NSE

₹80.25+₹1.35 (+1.71%)

DalalBaazaar Score

70 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Low

Driven by negative free cash flow.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

The 60-second version of Indian Railway Finance Corporation Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Indian Railway Finance Corporation Limited engages in leasing of rolling stock and railway infrastructure assets in India.

IndustryCredit Services

SectorFinancial Services

Employees59

Annual revenue₹27,075 Cr

How does it make money?

Turns over ₹27,075 Cr a year. Of every ₹100 of sales, about ₹26 reaches shareholders as profit, with ₹66 left at the operating level before interest, tax and depreciation. Each of its 59 employees supports ₹458.90 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹458.90 Cr

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 6.4% and earnings to grow about 5.8% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+6.4%

Est. earnings growth+5.8%

Analysts1

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +14% while net margin moved -1% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+14%

Margin effect-1%

DalalBaazaar Score

70/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 4.6% — barely ahead of inflation
✗ Profit CAGR of only 4.4%

Quality vs. Valuation

Company Quality

68/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

59/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

14.2x

3Y Median

24.8x

40 monthly readings · mean 24.9x · range 10.6x–41.0x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 43% below its 3y median of 24.8x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 16% below the peer median of 17.0x.

vs. its own history

Cheap

24.8x median over 40 months · -43%

vs. sector peers

Fair

17.0x median of 4 peers · -16%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

30.5x

PEG

3.26

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 47.7% to 65.6% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 high

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.7x — little room if earnings dip.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 47.7% to 65.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 43% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Growth barely outpaces inflation
Revenue compounding at 4.6% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 64%✓ 65.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Return on equity stays above 11%✓ 12.6%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Interest cover stays above 3x✗ 1.7x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✓ 4.6% CAGR
Latest reported year was 10.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Valuation vs its own median of 24.8x✓ 14.2x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

6 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 2 neutral · 3 weak

Market Cap

₹1.05 L Cr

Large Cap

Large, widely-covered business — typically the steadiest of the bands

P/E (Trailing)

14.2x

Cheap

Cheap against the generic band

P/B Ratio

1.73x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹5.64

Profitable

Profitable on a per-share basis

ROE

12.6%

Moderate

Moderate capital efficiency

ROCE

3.8%

Weak

Low return on total capital employed

Debt/Equity

7.15x

High

High leverage

Revenue Growth (YoY)

10.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

10.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

2.62%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

-₹27,040 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

11.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

1.4%

Weak

Assets generate little profit

Operating Margin

97.5%

Good

Healthy core-business profitability

Net Margin

97.1%

Good

Strong bottom-line conversion

Current Ratio

12.29

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.31

Defensive

Steadier than the market

52W Range Position

10%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

78.6 / 82.2

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

50.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹23,651 Cr	₹26,530 Cr	₹27,060 Cr	₹27,075 Cr	+4.6%
EBITDA	₹11,292 Cr	₹12,136 Cr	₹14,499 Cr	₹17,752 Cr	+16.3%
EBITDA Margin	47.7%	45.7%	53.6%	65.6%	—
PAT (Net Profit)	₹6,167 Cr	₹6,412 Cr	₹6,502 Cr	₹7,009 Cr	+4.4%
EPS	₹4.72	₹4.91	₹4.98	₹5.36	+4.3%
ROE	13.8%	13.0%	12.3%	12.4%	—
ROCE	2.6%	2.7%	3.2%	3.8%	—
Total Debt	₹4.19 L Cr	₹4.12 L Cr	₹4.12 L Cr	₹4.36 L Cr	+1.4%
Free Cash Flow	-₹28,589 Cr	₹7,906 Cr	₹8,229 Cr	-₹27,040 Cr	—

🟢 Revenue has grown at 4.6% a year over 3 years.

🟢 EBITDA has grown at 16.3% a year over 3 years.

🟢 EBITDA Margin has risen from 47.7% to 65.6% over 3 years (+17.8 pts).

🟢 PAT (Net Profit) has grown at 4.4% a year over 3 years.

🟢 EPS has grown at 4.3% a year over 3 years.

🔴 ROE has fallen from 13.8% to 12.4% over 3 years (-1.5 pts).

🟢 ROCE has risen from 2.6% to 3.8% over 3 years (+1.2 pts).

🟡 Total Debt has been broadly flat over 3 years (1.4% a year).

Balance Sheet & Cash Flow — FY2026

Total Assets

₹5.17 L Cr

Total Liabilities

₹4.60 L Cr

Cash & Equivalents

₹211 Cr

Operating Cash Flow

-₹27,026 Cr

Capex

-₹13 Cr

Shareholding (proxy)

Institutional Holding

4.9%

Insider Holding

82.9%

Corporate Actions

Next Earnings

15 Oct 2026

Dividend Rate

₹2.1

Ex-Dividend Date

23 Oct 2026

Analyst Consensus

Recommendations

0 Buy · 0 Hold · 1 Sell

Target Price (Mean)

₹60

-25.2% vs CMP

Target Range

₹60 – ₹60

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

3 positive1 mixed2 general

IRFC Q2 Profit Rises 10% to Rs 1,958 Cr

HDFC Sky, 15 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Indian Railway Finance Corporation Ltd. Share Price Update

Univest, 13 Oct

Bonus issues, stock splits & dividends: HDB Financial, IRFC, TechM among 19 stocks turning ex-record date

The Economic Times, 18 Oct

Earnings call transcript: IRFC posts strong H1 2027 growth, shares rise 2.1% By Investing.com

Investing.com South Africa, 16 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

IRFC Q2 results 2026, dividend: Navratna PSU declares highest-ever dividend; Profit rises 10% to ₹1,958 cr

Livemint, 15 OctCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

IRFC to announce interim dividend in Q2 results on Oct 15; stock rises 4%

Business Standard, 12 OctCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Profitability · Valuation · Risk

WeakGrowth

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Interest cover stays above 3x · see Key things to watch ↑