Shares of Indian Railway Finance Corporation (IRFC), the financial wing of the Ministry of Railways, were upbeat after a report suggested that the firm is set to expand its lending operations beyond railway projects.
What Happened: IRFC is planning to diversify its lending operations from the next quarter, according to a report by the Hindu Businessline.
The company has already begun funding “backward and forward linking railway projects” of other central public sector enterprises (CPSEs). This strategic move comes after the company made no disbursals to the ministry for the past five to six quarters.
The corporation’s market borrowings are negligible, with the majority of its borrowings used for the purchase of locomotives, wagons, coaches and project funding. In FY23, IRFC’s disbursal to the railways stood at nearly ₹5 lakh crore, the highest disbursal by any non-banking financial company (NBFC).
See Also: HAL Shares Slump 3% Ahead Of Q2 Earnings: What To Expect
Manoj Kumar Dubey, chairman and managing director of IRFC, stated that the company was planning to leverage its balance sheet strength to provide attractive funding to all sectors.
He added that the company was making concrete plans for a renewed lending structure, not limiting itself to railways directly but also to the backward and forward linkages in railways and logistics ecosystem.
Dubey explained that expanding beyond disbursals to the Railways is expected to improve margins. Currently, lending to the railways yields a margin of 35-40 basis points, but expanding into other sectors are likely to increase these margins.
Dubey also revealed that the company has started looking towards other entities having forward and backward linkages with the railways and the logistics sector. IRFC is entering an arrangement to fund NTPC for the purchase of their wagons, used in the railway system for their coal logistics.
Price Action: IRFC was trading 1.53% higher at ₹141.75 on Thursday.
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