The initial public offering of the Indian Railway Finance Corporation (IRFC) worth Rs 4,633 crore has been opened for subscription today, at Rs 25-26 each. Indian Railways’s dedicated market lending division has allocated 53.45 crore equity shares to investors at Rs 26 per share on Friday. IRFC’s gray market premium fell from Rs 1.60 on Friday to Rs 1.25-1.30 today. As it relates to rail financing, most analysts and brokers recommend that the issue be subscribed to during the three-day IPO process, which closes for subscription on January 20, 2021.
PSU stocks in for a sharp correction?
Vishal Wagh, Research Division at Bonanza Portfolio Limited, told Financial Express Online that Indian Railways’ extensive expansion plans will involve significant financing and that IRFC will be the primary source of financing for Indian Railways. Notably.
IRFC has relatively strong fundamentals, ”AR Ramachandran, co-founder and coach of TIPS2 Trade, told Financial Express Online. This is an attractively priced IPO with the current primary market frenzy in India, which makes it possible for short-term investors to subscribe to list profits. “However, long-term investors are advised to buy only at the Dip Post IPO as of the current market, and especially since the PSU shares are technically over-bought and with a sharp correction,” he said.
IRFC IPO bid details
IRFC is the first initial public offering for the calendar year of 2021 and the first public issue by the Non-Banking Finance Company (NBFC). IRFC can bid up to 575 shares of IPO with a large bid of Rs 14,950 per lot. With the initial public offering, the President of India, the promoter of IRFC, will offload the 13.6 per cent stake in the company, bringing the promoter shareholders to the issue after 86.4 per cent. “When it comes to the railways, we see sound management, government agency and a large scope to grow,” Vaughn added when recommending the list to list profits and subscribe for long-term portfolio holdings.
IRFC IPO Valuation
Analysts at Anand Rathi Financial Services have given the subscriber rating to IRFC as at the top of the IPO price list, giving it an 8x TTM earnings and 0.97x P / B. Analysts said: “We believe that the company is reasonably valued at present valuation and deserves greater credit. However, it relies heavily on the Indian Railways’ capex plans.” Said the broker’s IPO note.
Those who are at Angel Broking are recommending subscribers because they expect Indian Railways to post strong growth driven by Capex with fixed margins due to cost and model.