Mehabe score: 5 G Factor: 7 Piotski Score: 1 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 7 and Piotski score of 1.
Description
IRFC is the financing arm of Indian Railways. It borrows funds from the financial markets to purchase assets which are then leased out to the Indian Railways #.Site:IRFCMain Symbol:IRFC
Stock trades at 23.8, above its 50dma 23.6. However it is trading below its 200dma 23.93. The stock remains weak though short term bullish momentum supports price action. It needs to close above 23.93 for bullish price action to continue
The 52 week high is at 26.70 and the 52week low is at 20.75
Price Chart
P/E Chart
Sales and Margin
Strengths
– Stock is trading at 0.87 times its book value
-Stock is providing a good dividend yield of 4.41%.
– has delivered good profit growth of 39.08% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 20.78%
Weakness
– has low interest coverage ratio.
-Tax rate seems low
– has a low return on equity of 12.81% for last 3 years.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 4.6x. I R F C trades at the industry’s max P/E of 6.19x. IRFC trades at a P/E of 6.19x
– Industry’s mean G-Factor is 4.7 while the mean Piotski score is 6.0. IRFC has a G-Factor of 7 and Piotski scoreof 1.
– Average 1 month return for industry is 0.5%. The max 1- month return was given by Guj. State Fin.: a return of 25.77 %
Quarterly Results
Sales for period ended Jun 2021 is Rs 4582.0 cr compared to Rs 3206.0 cr for period ended Mar 2020, a rise of 42.9%
Operating Profits reported at Rs 4578.0 cr for period ended Jun 2021 vis-vis 3154.0 for period ended Mar 2020 .
Operating Margins expanded 153.5 bps for period ended Jun 2021 vis-vis Mar 2020 .
The EPS for Jun 2021 was Rs 1.15 compared to Rs 1.13 for previous quarter ended Mar 2021 and Rs 0.55 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 16683.0 cr for period ended TTM vis-vis sales of Rs 15770.0 cr for the period ended Mar 2021, a growth of 5.5%. The 3 year sales cagr stood at 14.4%.
Operating margins expanded to 100.0% for period ended TTM vis-vis 99.0% for period ended Mar 2021, expansion of 100.0 bps.
Net Profit reported at Rs 5026.0 cr for period ended TTM vis-vis sales of Rs 4416.0 cr for the period ended Mar 2021, rising 12.1%.
Company recorded a healthy Net Profit CAGR of 30.6% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 13.0% compared to 13.0% over the last 3 Years. – The stock has given a return of % on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 14% vis-vis a compounded sales growth of 19% over the last 3 Years. – The compounded profit growth on a TTM basis is 20% vis-vis a compounded profit growth of 29% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 0.86% vis-vis 1.44% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 9.03% vis-vis 7.97% for Mar 2021
Conclusion
– Stock is trading at 0.87 times its book value
-Stock is providing a good dividend yield of 4.41%.
– has delivered good profit growth of 39.08% CAGR over last 5 years
– has been maintaining a healthy dividend payout of 20.78% – has low interest coverage ratio.
-Tax rate seems low
– has a low return on equity of 12.81% for last 3 years.
– might be capitalizing the interest cost
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 23.6 and is trading at 23.8 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
