IRFC IPO: CEO Amitabh Banerjee explains future expansion plans of the company
Anchor allotment which is done is of Rs 1390 cr which is 30% of the issue size, 68.4% of which is from Domestic Investors while 31.6% is from FIIs. Major Anchor Book investors are HDFC Mutual Fund, Government of Singapore, Nippon MF, Invesco and many more. IRFC has gone very good response in their Anchor Book Investors which is the key reason of the Anchor Book being oversubscribed.
Anchor allotment which is done is of Rs 1390 cr which is 30% of the issue size, 68.4% of which is from Domestic Investors while 31.6% is from FII’s. Major Anchor Book investors are HDFC Mutual Fund, Government of Singapore, Nippon MF, Invesco and many more. IRFC has gone very good response in their Anchor Book Investors which is the key reason of the Anchor Book being oversubscribed.
According to SEBI, 25% of disinvestment has to be done in 3 years. Currently, 14% of divestment is happening, remaining 11% will happen anytime in next 3 years. IRFC will follow the guidelines issues by the SEBI.
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Total capex requirement for Indian Railways is Rs 161000 cr this fiscal. IRFC had received the initial mandate of Rs 58000 cr which was revised later to Rs 62500 cr. After this, IRFC received another mandate of Rs 51000 cr, which implied the company has to raise now 113500 cr this fiscal to meet the requirements of Indian Railways. Till end of December, IRFC had already raised Rs 34000 cr, IRFC has to Rs approximately Rs 80000 cr in remaining 2.5 months. This would be record disbursement this year and 70% of the capex requirement would be financed by IRFC.
IRFC Growth Outlook:
Asset under management (AUM) has been growing at the CAGR of 27% in last 3 years. Disbursements have been growing at the CAGR of 30% in last 3 years. Last year IRFC disbursed Rs 71500 cr while this year it will be Rs 113500 cr. IRFC wants to maintain the similar momentum next year as well. Infrastructure programme of Indian Railways is very ambitious and IRFC will have a key role in the same.
Margins and Spreads outlook:
The business model of IRFC is low cost and low risk. Risk and return go hand in hand, so when the risk is low, return would definitely be not higher. Spreads will be maintained at similar levels going forward or may increase as well. IRFC has written regarding spreads to Ministry of Railways (MoR), to revisit and improve the spreads of IRFS going forward.
There will be many transactions with huge volume of transactions and the spreads will be remaining constant or rather going forward it may improve a bit. Top line and bottom line CAGR will be constant at 20% and may improve a bit further.
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