IRFC Standalone June 2021 Net Sales at Rs 4,581.56 crore, up 24.86% Y-o-Y
Net Sales at Rs 4,581.56 crore in June 2021 up 24.86% from Rs. 3,669.22 crore in June 2020.
Quarterly Net Profit at Rs. 1,501.95 crore in June 2021 up 68.42% from Rs. 891.81 crore in June 2020.
EBITDA stands at Rs. 4,578.54 crore in June 2021 up 26.04% from Rs. 3,632.62 crore in June 2020.
IRFC EPS has increased to Rs. 1.15 in June 2021 from Rs. 0.68 in June 2020.
IRFC shares closed at 23.80 on August 13, 2021 (NSE)
Indian Railway Finance Corporation Limited (NSE:IRFC) Looks Inexpensive But Perhaps Not Attractive Enough
With a price-to-earnings (or “P/E”) ratio of 6.4x Indian Railway Finance Corporation Limited ( ) may be sending very bullish signals at the moment, given that almost half of all companies in India have P/E ratios greater than 21x and even P/E’s higher than 49x are not unusual. Although, it’s not wise to just take the P/E at face value as there may be an explanation why it’s so limited.
Indian Railway Finance has been doing a good job lately as it’s been growing earnings at a solid pace. One possibility is that the P/E is low because investors think this respectable earnings growth might actually underperform the broader market in the near future. If that doesn’t eventuate, then existing shareholders have reason to be optimistic about the future direction of the share price.
NSEI:IRFC Price Based on Past Earnings August 18th 2021
Does Growth Match The Low P/E?
Although there are no analyst estimates available for Indian Railway Finance, take a look at this to see how the company stacks up on earnings, revenue and cash flow.
There’s an inherent assumption that a company should far underperform the market for P/E ratios like Indian Railway Finance’s to be considered reasonable.
Retrospectively, the last year delivered a decent 7.7% gain to the company’s bottom line. EPS has also lifted 19% in aggregate from three years ago, partly thanks to the last 12 months of growth. Therefore, it’s fair to say the earnings growth recently has been respectable for the company.
Comparing that to the market, which is predicted to deliver 23% growth in the next 12 months, the company’s momentum is weaker based on recent medium-term annualised earnings results.
In light of this, it’s understandable that Indian Railway Finance’s P/E sits below the majority of other companies. Apparently many shareholders weren’t comfortable holding on to something they believe will continue to trail the bourse.
The Bottom Line On Indian Railway Finance’s P/E
Typically, we’d caution against reading too much into price-to-earnings ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.
As we suspected, our examination of Indian Railway Finance revealed its three-year earnings trends are contributing to its low P/E, given they look worse than current market expectations. At this stage investors feel the potential for an improvement in earnings isn’t great enough to justify a higher P/E ratio. If recent medium-term earnings trends continue, it’s hard to see the share price rising strongly in the near future under these circumstances.
It’s always necessary to consider the ever-present spectre of investment risk. (at least 2 which are a bit unpleasant), and understanding these should be part of your investment process.
If you’re unsure about the strength of Indian Railway Finance’s business, why not explore for some other companies you may have missed.
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Burger King, IRFC, ONGC, HAL, Eicher Motors, Ashok Leyland, ITC, Tata Steel, PFC stocks in focus
Equity markets are expected to continue with its positive momentum as the economic activities are expected to further pick up pace with the lockdown measures getting further relaxed. Image: Reuters
Nifty futures were trading flat on Singaporean Exchange, suggesting a cautious start for BSE Sensex and Nifty 50 on Friday. In the previous session, the 30-share index hit a record high of 54,874.10 and Nifty 16,375.50 in intraday. The market would react to India’s CPI inflation and IIP data which have come better than expected. Investors will also keep a close watch on first-quarter earnings, COVID vaccination pace, oil price and rupee movement against US dollar. “Equity markets are expected to continue with its positive momentum as the economic activities are expected to further pick up pace with the lockdown measures getting further relaxed. With earnings season being in the last leg, market would largely be tracking global cues for the direction,” Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services, said.
Stocks to watch
ONGC, HAL, Burger King: BSE-listed companies such as Godrej Industries, Grasim Industries, NBCC (India), NHPC, Oil and Natural Gas Corporation, Hindustan Aeronautics Ltd, Indraprastha Gas, Inox Wind, Burger King India, Sun TV Network, Allcargo Logistics, Archies, D B Corp, Gayatri Projects, Glenmark Pharmaceuticals, Gujarat Mineral Development Corporation, GMR Infrastructure, Godfrey Phillips India, Indian Railway Finance Corporation, IL&FS Investment Managers, Inox Wind Energy, Jammu & Kashmir Bank, Jagran Prakashan, Mawana Sugars, Petronet LNG, SEAMEC, Sintex Industries, Suven Pharmaceuticals, and Suzlon Energy, will announce Apr-Jun quater earnings on August 13.
Eicher Motors: Eicher Motors reported a consolidated profit after tax of Rs 237 crore for the quarter ended June, riding on improved sales. The company had witnessed a loss of Rs 55 crore in the April-June period of 2020-21.
Ashok Leyland: Ashok Leyland on Thursday reported narrowing of its net loss to Rs 282 crore in the three months to June 2021. The Hinduja Group flagship company had posted a net loss of Rs 389 crore in the same period a year ago.
Aurobindo Pharma: Aurobindo Pharma reported a 1.68 per cent decline in its consolidated net profit to Rs 769.97 crore for the quarter ended on June 30, 2021, mainly on account of reduction in expenses.
ITC: ITC said it is planning to invest around $2 billion over the medium term for capacity expansion and setting up new plants across businesses and bringing in contemporary technology to upgrade product quality.
NMDC: NMDC reported a 499 per cent increase in profit after tax (PAT) for the April-June quarter of the current fiscal at Rs 3,193 crore as against Rs 533 crore in the same quarter last fiscal, thanks largely to a very low base.
Power Finance Corporation: PFC has reported a net profit of Rs 2,273.6 crore for the quarter ended June 30 on a standalone basis, recording a year-on-year (y-o-y) rise of 33.8% on the back of higher interest income and lower cost of funds.
Bharat Forge: Bharat Forge reported a consolidated net profit of Rs 153.65 crore for the June quarter compared to the loss of Rs 125.81 crore it posted in the June quarter of the previous fiscal.
Tata Steel: Tata Steel reported robust numbers for the quarter ended June 30 as its net profit soared on the back of a global rally in steel prices and improved performance in the European business.