I R F C (IRFC)

FairStock Score: 58/100 — STEADY

Score breakdown: P/E: 2/3 · ROCE: 0/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Promoter holding of 84.65% gives IRFC a state-backed character and a strong structural moat.
• Stable earnings: latest quarter net profit ₹1,802 Cr on revenue ₹6,661 Cr, with profit growth of 7.18% despite flat sales.
• Piotroski F-Score of 7/9 and positive free cash flow of ₹8,229 Cr point to sound recent operations.
• ROE of 13.30% is respectable for a public-sector financier and supports book value of ₹40.30.

Concerns

• Valuation is rich: P/E 19.31 and P/B 2.61 for a business with -0.86% sales growth and only 1.55% dividend yield.
• Graham Number of ₹69.78 and a -48.39% margin of safety imply price is well above a conservative intrinsic estimate.
• High leverage: Debt/Equity of 7.83 and Altman Z-Score of 0.50 expose the firm to interest-rate and credit-stress scenarios.
• FairStock Score of 54/100 is mixed, and low ROCE of 5.83% reflects the burden of high leverage.

AI Analysis

Let me be blunt: a wonderful business can still be a terrible investment if you pay too much. IRFC is a high-quality, state-owned financing entity, with promoter holding at 84.65%. That concentrated ownership gives it a structural moat – it does not face the same competitive or survival risk as a private non-bank lender. The latest quarter shows net profit of ₹1,802 Cr on sales of ₹6,661 Cr, and profit grew 7.18% while sales declined 0.86%. This is steady, utility-like compounding, not rapid expansion. ROE at 13.30% is reasonable, but P/B at 2.61 means paying a heavy premium over book value of ₹40.30. Graham's intrinsic reference, the Graham Number, is only ₹69.78, and the stated margin of safety is -48.39%. Even the DCF value of ₹121.66 offers just a small cushion above ₹105; that is not the kind of margin Mr. Buffett demands. The FairStock Score of 54/100 is mixed, not compelling. The balance sheet is leveraged at 7.83 times debt to equity; Altman Z at 0.50 reminds me to be cautious, though financiers need special treatment. Positive signals exist: Piotroski F-Score 7/9, free cash flow of ₹8,229 Cr, and promoters have no reason to dilute. But price is the determinant of return. At ₹105, I am not being adequately compensated for the leverage, the flat sales growth, or the limited income yield. As Graham taught, paying a high price for a sound company can still produce unsatisfactory returns. I would wait for either a lower price or proof that lending growth can re-accelerate.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer