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NEW DELHI: The Rs 4,633 crore IPO by Indian Railway Finance Corporation (IRFC), hitting on Monday, has many brokerages recommending subscribe on it with long-term gains.
Analysts said the IPO looks attractively priced and can be a good bet for conservative long-term investors, as expansion drivers for return on equity (RoE) or margins are missing, even as the company is seen reporting consistent growth numbers.
Choice Broking said that valuation at price to book value (P/BV) of 1 time looks attractive for long-term conservative investors, considering the company’s strong profitability growth of 26.3 per cent during FY18-FY20, double-digit return on equity (RoE) of 12.2 per cent in FY21 and low risk profile of the business with zero gross non-performing assets (NPAs).
IRFC has posted strong growth in operating income of 20.7 percent CAGR between FY18-20 while net profits have grown at a CAGR of 26.3 percent during the same period.