IRFC IPO opens today: Here’s everything you need to know

IRFC IPO: The initial public offering (IPO) of Indian Railway Finance Corporation (IRFC) has a price band of Rs 25-26 per share and will be open for subscription during January 18-20, 2021.

The Rs 4,633 crore initial public offering (IPO) of Indian Railway Finance Corporation (IRFC) opens today and will be available for subscription till Wednesday, January 20, 2021. The price band of the dedicated financing arm of the Indian Railways has been fixed at Rs 25-26 per share.

Investors wishing to subscribe to IRFC’s IPO can bid in a lot of 575 equity shares and multiples thereafter. At the upper price band, they will shell out Rs 14,950 to get a single lot of IRFC. The shares will be listed on both BSE and the National Stock Exchange (NSE).

Investors must note that the cut-off time for UPI mandate confirmation is Thursday, January 21, 2020, upto 12:00 pm failing which their application may not be considered.

The IRFC IPO is of up to 178.20 crore (1,78,20,69,000) shares, comprising a fresh issue of up to 118.80 crore (1,18,80,46,000) shares and an offer for sale of up to 59.40 crore (59,40,23,000) shares by the government.

Ahead of its IPO, the company on Friday raised Rs 1,390 crore from its anchor investors, news agency PTI reported on Sunday.

DAM Capital Advisors (formerly known as IDFC Securities), HSBC Securities and Capital Markets (India), ICICI Securities, SBI Capital Markets are the lead managers to the IRFC IPO while KFin Technologies is the registrar to the issue.

The primary objective of IRFC is to meet the predominant portion of “extra budgetary resources” requirement of the Indian Railways through market borrowings at the most competitive rates and terms.

The funds raised from the issue will be utilised for augmenting the equity capital base to meet the future capital requirements in the business and general corporate purposes.

IRFC was set up in 1986 and it is a dedicated financing arm of the Indian Railways for mobilising funds from domestic as well as overseas markets.

Geojit Financial Services and LKP Securities in their respective research notes have recommended “Subscribe” to the offer. IIFL Securities however have “Not Rated” the IPO.

“IRFC has significant dependence on IR (Indian Railways) and MoR (Ministry of Railways) for its revenues. Change in capex plans or policies like IR having ability to raise its own funds, detrimental changes to term of agreement, lack of support in terms of ability to raise funds at lower rate or availability of funds are some of the key risk factors impacting the business and result of operation” IIFL Securities noted in its research report.

Geojit Financial Services in its research report said, “At the upper price band of Rs 26, IRFC is available at a P/E of 9x and P/B of 1.1x on an annualized basis, which appears attractive. Considering the extensive expansion plans of the Indian Railways, monopoly in the business, a low risk business model and stable RoE, we assign a Subscribe rating for the issue.”

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