Railway Stocks: In last 2 years the railway stock have manage to gain 600% valuation of its prior value and manage over 100% return in last one year.
Did Entire Railways have managed to Gain 600% Valuation?
First of all, the wing of Indian Railways which manage to achieve 600% valuation in last 2 years is Indian Railway Finance Corporation (IRFC) which is dedicated funding arm of Indian Railways.
It was set up in December 1986 for mobiising funds from domestic and overseas market to meet extra budgetary portion requirements of Indian Railway.
What were the driving factors which led 600% return in just 2 years?
The one and most important factor which contributed towards the sudden valuation is the involvement of big shark in the company, which includes Premji and Associates, President of India, SBI group, government of Singapore and many more.
Because of baking of days investors the traders and the market feels relatively confident and safe with the company IFRC itself.
Secondly the value of IFRC is highly associated with governmental policies , such as if there is increased budget for Railways the prices of IFRC shares will rise up otherwise opposite will be true.
Fortunately for IFRC, Government have supported Railway spending through and through their policies m very well.
However, because of prioritising political rationality over economical rationality sometimes cost IFRC valuation as well, because traders are in two confident in investing IFRC where Government have major 86.18% share.
This fact is well shown during the market collections of IFRC stocks which have dragged its valuation from record high level of 230 to 140 zone.
Current Status of IFRC Stocks
As of now, IFRC stocks has been traded at the rate of 157, where it is traded higher than 5 day 10 day 20 day and 30 days simple moving average (SMAs), but is lower than 50 day 100 day, 150 day and 200day SMAs.
As per BSE, the stock has price to equity (P/E) ratio of 29.08 against price to book value (P/B) of 3.81. earnings per share EPS stood at 4.93 with the Return on Equity (RoE) of 13.11
Expectation of Traders From IFRC
Investors has been expecting continuation of Bullish Streak of IFRC especially because of upcoming interim budget and a strong expectation regarding increased spending on Railways.
IFRC have also witness growth in quarterly net profit with increasing profit margin (YoY), decreasing debt to equity and improving ROCE the traders are quite interested in IFRC stocks.
But their, enthusiasm is limited because of Higher Interest Payments compared to Earnings, falling margins, decreasing Return on Equity, High Promoter Holding and Institutional Selling make set a riskier stock to invest as well.
All in all, IFRC have manage to sixfold its value in past 2 years but traitors and investors give it a suspicious look because of involvement of government in it. However, it offers incredible result both to long term and short terms as well as for Intraday as well.
Disclaimer: Demat Dive is not giving any buying advice on any stock. Consult a SEBI registered advisor before investing anywhere.
Railway Stocks
IRFC Ltd
