The Indian Railway Finance Corporation(IRFC) IPO which is owned by the State is all set to open to the public today, and its premier public offering for subscription will last from January 18 to January 20, 2021.
The first IPO launch of 2021 so far, Indigo Paints will soon open their IPO in the upcoming week as well. Here are a few issues that are raised with the opening of these IPOs:
The total proceeds from the latest issue are set to be used for augmenting the equity capital base in order to meet future capital requirements arising out of growth in the business and general corporate purposes.
Proceeds from the sale offered are going to be received by the selling shareholder, the Government of India only as the company does not receive any proceeds from this.
Public Issue Details
IRFC offers an initial public offering of up to 1,78,20,68,000 equity shares will be launched with the opening of this IPO. IPO consists of the latest issue of 1,18,80,46,000 shares and an additional sale of 59,40,23,000 equity shares by the government.
This fresh issue allows eligible employees to reserve equity shares worth Rs 50 lakh under subscription. This fresh issue also consists of up to 13.64% of post-issue paid-up equity shares capital of the economy.
The public issue price brand fixed by IRFC after consulting its merchant bankers, is now Rs 25-26 per share.
The primary business of the IRFC is the financing of acquisitions of rolling stock assets, which includes locomotives, industrial vehicles, and commercial vehicles assets like leasing of railway infrastructure assets and other such components of such stock.
Officially registered as NBFC under the Reserve Bank of India (RBI) and has now been classified under the category of “Infrastructure Finance Company” as well.
The rolling stock assets have been valued at Rs 2,23,810.78 crore and Rs 2,34,627.16 crore in March and September 2020 respectively, as announced by the IRFC. The FY20’s estimates for the value of these rolling stock assets are Rs 33,544.1 crore and six months later, Rs 10,816.38 crore.
The main business strategies followed by them are as follows:
- Broadening the business portfolio
- Diversifying the borrowing portfolio
- Continued focus on asset-liability management
- Providing advisory and consultancy services and venturing into syndicate activities
The target set by IRFC is to raise nearly Rs 4,455-Rs 4,633.38 crore with the price band of Rs 25-26 per share.
The competitive strengths of the IRFC are:
- Low-risk business model
- Consistent financial performance and cost model
- A senior and committed team
- Company’s strategic role in financing operations and growth of Indian Railways
- Strong asset-liability management
Shareholding & Management
The Promoter for this is the President of India and acts through the Ministry of Railways. Currently, they hold 100% of the pre-issue paid-up equity share capital of the company. As the issue opens, the Promoter will hold 86.36% of post-issue paid-up equity shares capital.
The company’s financials have also seen a strong growth in the operating income as net profits have grown significantly. Noticeable growth has also been spotted in the AUM and disbursements of the company.
With Amit Banerjee as the Chairman and Managing Director of the company and Shelly Verma as the Director of Finance and CFO, the company has also managed to secure highest ratings from CRISIL, ICRA and CARE – AAA & A1+. These are some of the highest ratings that can be acquired by an NBFC.