IRFC 2023-24 Annual Report Analysis

Wed, 7 Aug

IRFC has announced its results for the year ended March 2024. Let us have a look at the detailed performance review of the company during the year 2023-24.

IRFC Income Statement Analysis

• Interest income during the year rose 12.3% on a year-on-year (YoY) basis.
• Interest expenses were up by 15.2% YoY during the same period.
• Operating expenses declined by 0.3% YoY during the year.
• The company's net interest income (NII) increased by 4.3% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 112.6% in FY24 as against 90.4% in FY23.
• Other income declined by 65.5% YoY during the year.
• Net profit for the year increased by 4.0% YoY.
• Net profit margins during the year declined to 24.1% in FY24 from 26.0% in FY23.

IRFC Income Statement – 2023-24

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Interest Income	Rs m	237,214	266,446	12.3%
Other Income	Rs m	443	153	-65.5%
Interest Expense	Rs m	174,472	201,015	15.2%
Net Interest Income	Rs m	62,742	65,431	4.3%
Operating Expense	Rs m	1,373	1,368	-0.3%
Pre-provision Operating Profit	Rs m	61,812	64,215	3.9%
Provisions & Contingencies	Rs m	1,048	1,628	55.3%
Profit before tax	Rs m	61,672	64,121	4.0%
Tax	Rs m	0	0	0.0%
Profit after tax	Rs m	61,672	64,121	4.0%
Minority Interest	Rs m	0	0	0.0%
Net Interest Margin	%	90.4	112.6
Net profit margin	%	26.0	24.1

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IRFC Balance Sheet Analysis

• The company's deposits during FY24 stood at Rs 0 m as compared to Rs 0 m in FY23, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 0 m as compared to Rs 0 m during FY23, a rise of 0.0%.
• Cost of deposits for IRFC rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments fell to Rs 58.1 bn during the year from Rs 69.4 bn in FY23.
• Borrowing stood at Rs 0 m, a growth of 0.0% as compared to previous year.
• Overall, the total assets and liabilities for FY24 stood at Rs 4,850.8 bn as against Rs 4,903.6 bn during FY23, thereby witnessing a fall of 1.1%.

IRFC Balance Sheet – as on March 2024

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*	% Change
Networth	Rs m	446,802	491,786	10.1%
Advances	Rs m	0	0	0.0%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	69,410	58,125	-16.3%
Borrowings	Rs m	0	0	0.0%
Total Assets	Rs m	4,903,588	4,850,824	-1.1%

Current Valuations for IRFC

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs 4.9, an improvement from the EPS of Rs 4.7 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 179.3, stands at 22.4 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 4.8 times, while the price to income ratio stands at 5.4 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Income per share (Unadj.)	Rs	18.2	20.4
Earnings per share (Unadj.)	Rs	4.7	4.9
Diluted earnings per share	Rs	4.7	4.9
Avg P/E ratio	Rs	6.0	22.4
Avg P/ABV ratio	Rs	1.5	4.8
Avg Market Cap	Rs	368,532	1,434,661
Dividends per share (Unadj.)	Rs	1.50	1.50

Ratio Analysis for IRFC

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio improved and stood at 0.0x during FY24, from 0.0x during FY23. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio increased and stood at 0.00x during FY24, from 0.00x during FY23. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): IRFC's capital adequacy ratio (CAR) was at 616.2% as on 31 March 2024 as compared to 512.0% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company deteriorated and stood at 13.0% during FY24, from 13.8% during FY23. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company improved and stood at 1.32% during FY24, from 1.26% during FY23. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company improved and stood at 5.73% during FY24, from 5.29% during FY23. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. IRFC's gross NPA ratio stood at 0.0% as of 31 March 2024 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of IRFC was 0.0% in financial year 2024. This compared with 0.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-23*	12 Mar-24*
Credit/Deposit Ratio	x	0.0	0.0
Debt to Equity Ratio	x	0.0	0.0
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	512.0	616.2
Return on Equity	%	13.8	13.0
Return on Assets	%	1.3	1.3
Return on Capital Employed	%	5.3	5.7
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	0.0	0.0
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how IRFC has performed over the last 5 years, please visit here.

IRFC Share Price Performance

Over the last one year, IRFC share price has moved up from Rs 49.8 to Rs 179.3, registering a gain of Rs 129.5 or around 260.1%.

Overall, the S&P BSE SENSEX is up 20.5% over the year.

(To know more, you can check out historical annual results for IRFC here and quarterly results for IRFC here)