Indian Railway Finance Corporation (IRFC) has reported a slight dip in net profit for the fourth quarter ending March 2025, despite a modest increase in revenue. The state-run financier is also unveiling ambitious plans to diversify its funding avenues and client base, moving beyond its traditional focus solely on Indian Railways.
As of 12:15 PM on April 29, 2025, IRFC's stock was trading at ₹127.84. For the quarter ending March 2025, IRFC's net profit slipped by 2.1% to ₹1,681.87 crore, down from ₹1,717 crore in the same quarter of the previous fiscal year. This slight decline in profit comes amidst a rise in total income, which increased by 3.8%, reaching ₹6,722.83 crore in Q4 FY25, compared to ₹6,478 crore in Q4 FY24. Earnings per share (EPS) for the quarter rose to ₹1.29 from ₹1.25 in the year-ago period.
For the full financial year (FY25), IRFC's net profit climbed 1.4% to ₹6,502 crore, compared to ₹6,412 crore in FY24. Revenue for FY25 rose to ₹27,156.41 crore from ₹26,648 crore in the previous year. In a significant development, IRFC's board of directors approved raising resources of up to ₹60,000 crore for the current fiscal year (FY26). This fund-raising will be sourced from both domestic and international markets through a mix of instruments.
IRFC is actively pursuing diversification plans, moving beyond its historical role as the sole financier for Indian Railways. The company is now setting its sights on financing metro railways and rapid rail projects. Manoj Kumar Dubey, Chairman and Managing Director of IRFC, stated, "These businesses will also be very attractive for us." The state-run company has already begun participating aggressively in new opportunities, winning three consecutive bids over the past three months and securing around ₹14,000 crore in assets.
Dubey noted that the growth is coming from assets that have backward and forward linkages with the railways. He added, "Margins from these new bids are nearly 2 to 3 times what we used to get from the Railways." For the financial year 2025-26 (FY26), IRFC is targeting disbursements of around ₹30,000 crore, which, given the higher margins, would be equivalent to nearly ₹90,000 crore of traditional Railway lending.
Despite the marginal profit decline, the improved net interest margin (NIM) is expected to lead to a steady upward trend in the bottom line. IRFC is targeting a NIM of more than 2% going forward, up from the current level of around 1.4%. While the topline may not grow dramatically, the focus on higher-margin assets is anticipated to boost IRFC's profitability.
Following the results and announcements, IRFC's stock saw a decline. On Monday, April 28, 2025, the stock fell as much as 1.75% to ₹126.55 apiece, before slipping 2% to ₹125.55. However, on Tuesday, April 29, 2025, the share price saw an uptick, currently trading at ₹127.85, with a slight increase of 0.50%. The firm's market capitalisation fell to ₹1.65 lakh crore on the BSE. Year-to-date, the share price has fallen 14.87%, and in the last 12 months, it has decreased by 19.71%. Despite recent declines, the stock has demonstrated significant long-term gains, zooming 298.43% in two years and rallying 465.63% in three years.
Market analysts have noted that IRFC shares have been under pressure for nearly 8-9 months, erasing all gains clocked in the previous year. The stock has underperformed the benchmarks significantly, with a recommendation from market experts to hold positions while keeping an eye on critical support levels around ₹100. An investment of ₹1 lakh in IRFC five years ago would now be worth approximately ₹5,14,879, reflecting a gain of 414.88%.
Looking ahead, the company is optimistic about public-private partnerships (PPPs) and government-backed railway projects driving demand. Dubey emphasized that IRFC's competitive edge lies in its low-cost funding, with operational costs under 0.1% and a pristine zero non-performing asset (NPA) record. The board has already approved a fundraising plan for FY26, indicating confidence in demand and ongoing capital expenditure plans in Indian Railways.
IRFC is also exploring various funding options, including tax-free bonds, taxable bonds, and institutional financing, to support its diversification initiatives. The company aims to capitalize on refinancing existing loans for ongoing railway projects, which will further enhance its market position.
In conclusion, while IRFC faces challenges in the short term with a slight dip in profits and market pressures, its strategic diversification into higher-margin projects and robust fundraising plans position it favorably for future growth. Investors are advised to monitor market trends and the company's performance closely as it navigates this pivotal transition.
