Results: Record disbursal, cheaper fund cost buoy IRFC net by 126% to Rs 1,482.5 cr in Q4

Indian Railway Finance Corporation (IRFC) has reported a 126 per cent jump in net income to record Rs 1,482.55 crore in the March quarter, mainly due to higher interest income from record disbursals and cheaper funds.

It had clocked a net income of Rs 654.63 crore a year ago.

The New Delhi-based dedicated market borrowing arm of the Railways attributed the massive growth in the bottom line to the traditionally busy season effect when the Railways draws down the maximum funds from it.

For the full year, it has booked a profit of Rs 4,416.13 crore, up 38.34 per cent from Rs 3,192.06 crore in FY20, as its revenue from operations rose 17.5 per cent to Rs 15,770.47 crore from Rs 13,421.09 crore in FY20.

Of the close to Rs 1.05 lakh of annual disbursement, which was a record for us, as much as Rs 64,000 crore was disbursed in the reporting quarter, boosting our net income. Normally, the Railways draws down the maximum credit line in the March quarter, but this time the disbursement has been the highest, Amitabh Banerjee, chairman and managing director of IRFC, told PTI on Wednesday.

He said the cost of funds came down by 85 bps to 6.51 per cent in the reporting year, from 7.36 per cent in FY20. Normally, IRFC takes a low 40 bps margin over the fully hedged, weighted average cost of its funds.

Quarterly revenue grew 39 per cent to Rs 4,455 crore from Rs 3,205 crore a year ago, while total expenses for the quarter rose to Rs 2,972.4 crore against Rs 2,551 crore in the corresponding quarter of the previous fiscal.

Annual disbursement for the reporting year grew 46.2 per cent from Rs 71,392 crore in FY20 to cross the one-lakh crore market at Rs 1,04,369 crore in FY21, taking its assets under management for FY21 at over Rs 3.60 lakh crore as against over Rs 2.66 lakh crore, a growth of 35.29 per cent and its liabilities to Rs 3.24 lakh crore, Banerjee explained.

To date, IRFC has extended Rs 4.4 lakh crore loans to the Railways since 1986 when it was set up.

He said the original demand from the Railways was only Rs 58,000 crore for the year, which was revised upwards to Rs 65,000 crore and then to Rs 1.05 lakh crore.

He said of the total debt, around Rs 55,000 crore or about USD 7.5 billion, which is 17 per cent of the total liabilities of Rs 3.24 lakh crore, are forex debt, raised through external commercial borrowings.

On the borrowing plans, he said as of now we will have to raise Rs 65,000 crore, as that is the funding need notified by the Railways, which could go up as the year draws to a close.

The company's capital adequacy ratio was 415.85 per cent in FY21, up from 395.39 per cent in FY20, and has never reported a penny in bad loans since its inception in 1986, Banerjee said.

As the profit jumped, it also almost doubled the corporate social responsibility spends to Rs 93.44 crore in the year from Rs 49.45 crore in FY20, he added.

Commenting on the earnings, he said the company has continued to show strong growth momentum both in terms of revenue and profit in the reporting financial year, driven by the massive investment outlay by the Railways.

He also expressed confidence in maintaining sustained growth in revenue and profitability going forward as a major portion of the funding requirement of the Railways is to be met through IRFC.

Banerjee said, traditionally, the first quarter is weak and so far the Railways has drawn down only Rs 5,500 crore of the Rs 65,000 crore notified amount.

Despite a stellar set of numbers, the IRFC counter shed 1.8 per cent to close at Rs 24.85 on the BSE, whose benchmark Sensex declined for the third day losing a tad 65 points from its previous close.

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