IRFC vs RVNL: Indian Railway Finance Corporation (IRFC) and Rail Vikas Nigam Limited (RVNL) are two of the biggest Railway Stocks in India. Despite the recent fluctuations in the stock price, both the companies have performed exceptionally well in the last few years delivering multibagger returns to shareholders.
IRFC is the financial arm of Indian railways while RVNL handles Railway projects and Infrastructures. With the Indian government planning to develop and enhance Railway Infrastructures in the country, these two companies will benefit the most.
Both Railway stocks have strong fundamentals and financial performance. Investors looking for long-term growth Railway stocks are confused whether to invest in RVNL or IRFC. In other words which Railway Stock is better and which one will deliver multibagger returns in future.
Although both companies deal with different businesses, we will consider several factors so that you can easily pick one or invest in both.
Table of Contents
1) Indian Railway Finance Corporation (NSE: IRFC)
Incorporated in 1986, Indian Railway Finance Corporation (IRFC) is the financial arm of Indian Railways. In other words IRFC works as a banker to the ministry of Railways for the development of Indian Railway Infrastructures.
Generally IRFC generates revenue through leasing rolling stock assets such as wagon, freight, locomotives and passenger coaches etc. The company raises funds from financial markets for the development of railway infrastructures.
IRFC Share Price NSE
On March 4, IRFC Shares ended the session at Rs 114.65, down by 3.44% on NSE. The stock has 52-week of Rs 229 and 52-week low Rs 116.65.
IRFC Fundamental Analysis
Market cap of IRFC currently stands at Rs 1,84,004 crore which is two times bigger than RVNL. The company is maintaining a healthy ROE of 13.75% and ROCE of 5.38% in the last 5 years. IRFC is debt free which is one of the most important fundamentals of the company.
Also Read: IRFC Share Price Target From Tomorrow Upto 2050
IRFC Financial Performance
IRFC has shown consistent financial performance in the last 5 years. In the last 5 years, IRFC has shown a healthy income growth of 19.07% and profit growth of 23.25%. Talking about its recent quarterly report, IRFC reported a 2% rise in net profit while revenue growth remained flat in Q3FY25.
IRFC Share Performance
Despite the recent fluctuations in the stock price, IRFC has delivered 83.1% CAGR in the last 3 years and 41.5% CAGR in the last 5 years. The share price is continuously falling since the interim Budget 2024. In the last one year, the stock has delivered negative returns of 17.66% while its all time gain is 467.26%.
IRFC Dividend
IRFC is consistently paying dividends to its shareholders which indicates that the company is financially healthy. IRFC has a dividend yield of 1.07%
IRFC Valuation
Talking about the valuation of the company, two important valuation ratios including P/E ratio and P/B ratio are important. IRFC has a P/E ratio of 28.15 while the average industry P/E ratio of the last 5 years is 9.21. Similarly IRFC has a P/B ratio of 3.54 while its last 5 years industry average is 1.22. Based on the 5 year industry average IRFC Share is overvalued.
What is the Future of IRFC?
The Indian government aims to complete a number of projects including electrification, lay out new tracks, upgrade speed trains and improve railway Infrastructure. With IRFC extending its hand to support the development of Indian railway infrastructures, the company is poised for significant growth in future. However, several key factors including the company’s financial performance, upcoming budget and the expansion of Railways will directly impact the stock price of IRFC.
2) Rail Vikas Nigam Limited (NSE: RVNL)
Incorporated in 2003, Rail Vikas Nigam Limited is a public sector undertaking (PSU) railway company controlled by the ministry of railways. The company is specialized in construction of Railway projects such as metro, new rail lines, bridges and other railway infrastructures etc. Additionally, RVNL is also engaged in the business of road, transportation, irrigation and electrical transmission works through joint ventures.
Backed by a strong order book, RVNL generates revenue by completion of railway projects. In addition, RVNL is expanding its business internationally.
RVNL Share Price NSE
RVNL shares closed at Rs 326.40 with a fall of 0.87% on NSE. RVNL has a 52-week high of Rs 647 and 52-week low of Rs 213.05.
Also Read: RVNL Share Price Target From Tomorrow Upto 2050
RVNL Fundamental Analysis
RVNL has a Market cap of Rs 85,496.25. The company is maintaining a healthy ROE of 20.18% and ROCE of 16.65% in the last 5 years. RVNL has a debt of Rs 6,004 crore.
RVNL Financial Performance
Talking about Financial Performance, RVNL has not announced Q3 results yet. However in Q2 RVNL reported a 27% decline in net profit while revenue growth dropped 1%. In the last 5 years RVNL has shown a healthy income growth of 16.65% and profit growth of 19.25%.
RVNL Share Performance
RVNL shares have delivered 37.27% in the last one year and more than 1,457.87% in the last 5 years. In the last 3 years, RVNL has given 125.7% CAGR returns while it is 72.1% CAGR in the last 5 years.
RVNL Dividend
Just like IRFC, Rail Vikas Nigam Limited also gives Dividends to its Shareholders. RVNL has a Dividend yield of 0.51% which is nearly half compared to IRFC.
RVNL Valuation
RVNL shares are overvalued compared to the P/E ratio of 66.82 which is high. Similarly RVNL has a P/B ratio of 10.76 which also indicates that the shares are currently overvalued.
What is the Future of RVNL?
Rail Vikas Nigam Limited is currently working on several projects. With continuous orders and a strong order book of around Rs 90,000 crore, Rail Vikas Nigam Limited is poised for significant growth in future. However, the stock price is influenced by various factors including budget 2025, railway Development expenditure and progress of ongoing projects.
Which Railway Stock is Better: IRFC vs RVNL?
IRFC and RVNL have both performed well in respect to share performance as well as financially. IRFC is generating its revenue through leasing and financing Railway assets. RVNL, on other hand, is backed by a strong order book and expanding its business internationally to increase its Revenue. Despite both the stock have experienced massive corrections, it has the potential to recover and deliver substantial returns.
IRFC and RVNL both are well positioned and doing well in their respective fields. Both Railway stocks backed by the government’s push towards development of railways Infrastructures. So Investors with a long-term perspective can choose either of the Railway stock or Invest in both.
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