The Indian Railways Finance Corporation (IRFC) has announced its initial public offering (IPO). IRFC is a government-owned company that finances the Indian Railways. The IPO is set to open on January 18th and close on January 20th. The issue size is ₹ 4,633 crore and the price band is set between ₹ 25 and ₹ 26 per share. This article will discuss the prospects of the IPO being oversubscribed.
Overview of IRFC IPO
IRFC is a government-owned company that finances the Indian Railways. The company is a Non-Banking Financial Company (NBFC) and it has been around for more than three decades. The company has a strong track record of providing loans to the Indian Railways for the purchase of rolling stock, track and other infrastructure. The company also provides leasing and working capital loans to the Railways.
The IRFC IPO consists of a fresh issue of ₹ 4,633 crore and an offer for sale of up to 6.20 crore equity shares. The price band for the issue is between ₹ 25 and ₹ 26 per share. The company plans to use the proceeds of the IPO for augmenting its capital base.
Will IRFC IPO Be Oversubscribed?
The IRFC IPO is expected to be well received by investors due to its strong financials and attractive pricing. The company has posted strong growth in its net profits in the past three years, with the profits increasing from ₹ 2,006 crore in FY18 to ₹ 3,845 crore in FY20. The company’s return on equity has also been impressive, with the figure standing at 18.7% in FY20.
In addition, the pricing of the IPO is attractive. At the upper end of the price band, the company is valued at 2.3 times its FY20 book value. This is lower than the valuation of other NBFCs in the market.
Given the strong financials of the company and the attractive pricing, the IRFC IPO is likely to be oversubscribed.
In conclusion, the IRFC IPO is likely to be oversubscribed due to its strong financials and attractive pricing. Investors should evaluate the company’s financials carefully before investing in the IPO.