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    I R F C

    IRFCNeutral
    Financial Services·24 May 2024
    Management Summary

    IRFC's FY24 was marked by zero fresh disbursements as railways shifted entirely to budgetary support. Despite this, financials remained stable through moratorium interest capitalization. CMD (Addl Charge) Uma Ranade outlined a 2-year window to diversify using the moratorium cushion, with the company actively exploring railway backward/forward linkages, renewable energy for railways, state JV projects, and multimodal logistics parks. However, no concrete deals or numbers were shared.

    Highlights

    8

    • Revenue at Rs 26,645 crores for FY24 vs Rs 23,721 crores in FY23

    • PAT at Rs 6,412 crores for FY24 vs Rs 6,167 crores (restated) in FY23

    • AUM at Rs 4.64 lakh crores; 98.94% exposure to Indian Railways

    • Zero disbursements in FY24 due to railways funded entirely by GBS (budgetary support)

    • Net worth grew to Rs 49,178 crores; gearing ratio at 8.38x; CRAR at 616%

    • ROE at 13.66%; ROA at 1.31%; NIM at 1.38%; EPS at Rs 4.91

    • Total dividend Rs 1.50/share for FY24 (interim Rs 0.80 + final Rs 0.70)

    • Operating expenses at 0.09% of total income - one of industry's lowest

    Concerns

    2

    • Zero fresh disbursements for entire FY24; no EBR allocation in interim budget FY25

    • New business diversification still at preparatory stage with no concrete deals

    Key financials

    Single quarter

    11 metrics
    1. 01Revenue₹26,645 Cr+12.3%YoY
    2. 02Profit After Tax₹6,412 Cr+4.0%YoY
    3. 03AUM₹4.64L Cr
    4. 04Net Worth₹49,178 Cr
    5. 05Gearing Ratio8.38 times

    Segment breakdown

    • Rolling Stock Lease35.5%35.5%
    • Project Lease20.4%20.4%
    • Advance Against Projects43.0%43.0%
    • RVNL Loan106%1.1%
    Donut· Share of AUM Share

    Guidance & targets

    2
    CategoryTargetPriority
    Strategy
    Diversification Timeline
    Within 2 years
    		Medium
    Margins
    Spread on New Business
    Higher than IR spreads (industry standard)
    		Medium

    Risks & concerns

    6
    RiskSeverity

    Zero fresh disbursements for entire FY24; no EBR allocation in interim budget FY25

    Government shifted 100% to budgetary support for railways. Management waiting for full budget. No guarantee EBR will return. — Analyst acknowledged

    high

    New business diversification still at preparatory stage with no concrete deals

    CMD admits 'it would be difficult to share any kind of ballpark numbers' on new business. Only internal preparations underway - credit policy, appraisal team hiring. — Analyst acknowledged

    high

    NII flattish at Rs 6,200-6,400 cr for 3 consecutive years

    CFO confirmed NII accretion limited to redeployment; lease agreement execution doesn't boost NII. Without AUM growth, NII stays flat. — Analyst acknowledged

    medium

    Restatement of Rs 790 crores in lease receivables due to accounting error

    Short accounting of capital recoveries in terminal year discovered. Rs 620 cr restated to FY22, Rs 170 cr to FY23. — Management acknowledged

    low

    Areas of Evasion(2)

    • New business opportunity sizing not provided
    • Spread estimates for new ventures not given

    Q&A highlights

    3

    “Although there has been no incremental disbursement during '23, '24, but there has been hardly any impact on my AUM. It has gone down only by 2,000 crores because we have capitalized our interest on the previous disbursement.”

    Rs 2 trillion in project assets under moratorium creates interest capitalization that offsets capital recovery, maintaining AUM. Critical to understand IRFC's accounting model.

    asked by Ritika Dua (Bandhan AMC)

    1 min read4 chapters

    Detailed Narrative

    01

    FY24 Performance: Stable Despite Zero Disbursements

    IRFC reported revenue of Rs 26,645 crores and PAT of Rs 6,412 crores for FY24, growing modestly despite zero fresh disbursements. AUM held at Rs 4.64 lakh crores (down only Rs 2,000 crores) due to interest capitalization on Rs 2 trillion of moratorium project assets. Operating expenses remained industry-lowest at 0.09% of income. NIM at 1.38% and ROE at 13.66%.

    02

    EBR Dried Up as Government Shifts to Budgetary Support

    Government allocated Rs 2.52 lakh crores in GBS for railways in interim FY25 budget with zero EBR requirement from IRFC. This continues the trend from FY24. Management awaits full budget for clarity but acknowledges the shift may be structural. The company's sole revenue source for 38 years has been essentially paused.

    03

    Diversification Plans - Early Stage

    IRFC is exploring railway backward/forward linkages: rolling stock leasing to non-MoR entities, state JV infrastructure, dedicated freight corridors, multimodal logistics parks, and renewable energy for railways. Board approved credit policy, internal credit committees formed, and appraisal/technical agencies onboarded. However, no deals sanctioned or numbers shared. Management has a 2-year window before moratorium cushion expires.

    04

    Accounting and Financial Structure

    AUM split: rolling stock 35.52%, project leases 20.37%, advances against projects 43.05%, RVNL loan 1.06%. Borrowing mix: bonds 48%, term loans 31%, ECB 17%, NSSF 4%. Weighted asset tenure 8.6 years vs liability tenure 7.4 years. Cost-plus model passes all risks (interest, currency) to railways. Lease period is 30 years (15+15 for rolling stock, 5+15+10 for projects).

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.