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Informist, Thursday, Apr. 2, 2026

 

--IRFC source: Expect FY26 net profit to be up over 10% from FY25

--CONTEXT: IRFC had reported net profit of INR 65.02 billion for FY25

--IRFC source:Talking to MUFG Bk to raise yen equivalent of $400 mln-$500 mln

 

By Priyasmita Dutta and Sagar Sen 

 

NEW DELHI – Indian Railway Finance Corp. Ltd. is likely to report more than 10% growth in net profit for the financial year 2025-26 (Apr-Mar) on the back of healthy margins, a senior company official said Thursday. For FY25, the company had reported a net profit of INR 65.02 billion, up just 1.4%, on a total revenue of INR 271.52 billion.

 

The company's net interest margin as of Dec. 31 had improved over 8% on year to 1.51%. According to the official, the railway sector financier's margins are improving every quarter as it is diversifying its lending portfolio. The Navratna public-sector enterprise primarily finances projects with forward or backward linkages with railways.

 

The sharp improvement in profitability is also owing to steady disbursements during the year, the official told Informist. IRFC disbursed INR 330 billion in FY26 to various projects across the country, higher than the internal target of INR 300 billion set by the board. "Sanctions during the year totalled around INR 600 billion," the official said. 

 

For FY27, IRFC's board has set an internal target to disburse INR 300 billion-INR 400 billion. "The assets under management are expected to grow steadily with multiple projects already in the pipeline," the official said. The company's assets under management added up to INR 4.60 trillion at the end of FY25.

 

A key project that IRFC plans to finance in FY27 belongs to Chennai Metro Rail Corp. and is being managed by L&T Construction. IRFC also plans to finance a project in Bhutan, a joint venture between Tata Power Co. Ltd. and Bhutan's Druk Green Power Corp. The total project cost is estimated to be over INR 120 billion, and IRFC plans to extend loans of over INR 50 billion in FY27 for this project, the official said. Under the project, the two companies will set up a massive hydroelectric power unit that will supply electricity to both countries.

 

In September, the company had signed a loan agreement with Maharashtra State Power Generation Co. Ltd. to provide up to INR 105.60 billion towards the upcoming 1,320 megawatt supercritical expansion project at the Koradi Thermal Power Station in Nagpur. IRFC has also signed an agreement with Haryana Power Generation Corp. Ltd. to provide financing up to INR 59.29 billion for the upcoming 800-megawatt supercritical thermal power project at Deenbandhu Chhotu Ram Thermal Power Plant in Yamunanagar. The company has also signed two agreements worth INR 166.40 billion to fund a power project in Chhattisgarh and a urea project in Odisha.

 

To finance the company's robust pipeline of projects, its board has approved a market borrowing programme of up to INR 700 billion for FY27. According to the official, the company is looking to raise the yen equivalent of $400 million-$500 million in the next few months and Chairman and Managing Director Manoj Kumar Dubey met officials from MUFG Bank in this connection in March. According to the official, the tenure of such loans is generally between five and seven years.

 

In FY26, IRFC had raised the yen equivalent of $700 million from MUFG Bank and Sumitomo Mitsui Banking Corp. The company first raised funds from the Japanese market in FY22. It had raised the yen equivalent of $1.10 billion in two tranches of $700 million and $400 million, with tenures of 10 years and seven years, respectively. These were in the form of green bonds or green loans.

 

The company is, however, going to be cautious about raising funds overseas in FY27, given the geopolitical uncertainties, the official said. "Given the situation of the financial markets because of the war in West Asia, we may focus more on the domestic market," the official said. "The hedging cost may sometimes be a deterrent as the final cost to the borrower may not be very lucrative."

 

The railway financier's cost of borrowing was about 7% at the end of December, Dubey had said in a conference call with analysts after the company's December quarter results. "And overall cost is always remaining less than 7%... at times it may be quite attractive even to 6.5-6.6% level," he had said. "The target we are looking forward to is a borrowing mix which is cheaper than the G-Sec (government securities) rate." India's 10-year benchmark government bond closed at 7.13% yield Thursday, the highest closing level since May 2024. 

 

For the nine months ended December, IRFC had reported a net profit of INR 53.24 billion, up 10.5% on year. Thursday, its shares ended flat at INR 91.84 on the National Stock Exchange.  End

 

US$1 = INR 93.10

 

Edited by Rajeev Pai

 

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