Indian Railway Finance Corp (IRFC): Top Railway PSU Stock Falls By 23% From 52-Week High; Time To Buy Or Exit?

With zero returns in the past 1 month, railway giant, Indian Railway Finance Corp Ltd (IRFC) has taken a backseat in recent times. The stock which touched its all-time high of Rs 229 apiece in mid-July, has nosedived by over 23% since then. Currently, the stock is below Rs 180 levels and continues to be a multi-bagger despite the latest corrections. Should you buy or sell or maintain cautious in IRFC.?

At present, IRFC's share price stood at Rs 176.13 apiece, after market hours of September 4 on NSE. The company's market cap is Rs 2,30,175.60 crore, making it the largest railway stock in the market.

The stock touched its 52-week high of Rs 229 apiece on July 15, 2024, after PM Modi and his government's third win in the general election. The stock is trading above 208% from its 52-week low of Rs 57.15 apiece.

In the 5-trading session, IRFC's share has dipped by 2.52% on the NSE, and in a month, the stock is down by 2%. But this does not stop IRFC from becoming a multi-bagger, because it has received substantial upside since 2023 and its long-term trajectory keeps the stock in trend.

YTD, on NSE, the stock is up by 75.4%. In a year, IRFC is up by 164%.

Among key positives for the stock as per Trendlyne data is that - the stock rose by 215.73% and outperformed its sector by 163.05% in the past year. Its Return on Equity(ROE) for the last financial year was 13.03%, in the normal range of 10% to 20%. Further, Mutual Fund Holding increased by 0.37% in the last quarter to 0.55. Also, its Promoter Pledges are zero.

Meanwhile, in terms of fundamental drawbacks, the stock's Price to price-earning ratio is 35.67, higher than its sector PE ratio of 20.59. While its Debt to Equity Ratio of 8.38 is higher than 1, which implies that company assets are financed through debt.

In terms of technical, the data revealed that IRFC's key moving averages are stable with RSI and MFI at 39.5 and 55.6. When these moving averages are below 30, they are considered oversold, and when they are above 70, it hints at overbought scenario. Also, the stock is trading below 5 out of 8 SMAs, and further, it is trading below 7 out of 9 Oscillators in bearish zone.

What should investors do with IRFC shares?

Technical analyst Manas Jaiswal told CNBC Awaaz that one needs to be cautious towards shares of IRFC as the stock is making lower tops and lower bottoms on the charts and is now nearing a very critical support level.

As per Jaiswal, the 100-day moving average of IRFC is currently placed at Rs 170. If the stock falls below this moving average, then it has a potential to dip further towards Rs 150 levels which would be its 200-day moving average. Hence, he advised investors, as per the report, to keep a stop loss of Rs 172 on IRFC and in case of downtrend below the moving averages, he recommends investors to exit.

In Jaiswal's view, fresh buying in the stock should be only after IRFC crosses Rs 190 mark.

Moreover, a market expert told ET NOW Swadesh in a special show, that IRFC has shown potential for long-term growth owing to its strong ties with the government's Indian Railways and overall growth opportunities that are ahead in the sector. This market expert believes that despite the latest correction, the stock has been consolidating and indicating signs of stability.

On the other hand, Prabhudas Lilladher has maintained its long-term target price of Rs 250 on IRFC. As per this brokerage, the stock has been consolidating for quite a while near the 178 zones of the long-term trendline support level after the decent correction from the peak zone of 229 levels and has indicated signs of improvement moving past the significant 50EMA level of 183 and with bias getting better is anticipated to rise further in the coming days. With the RSI cooling off from the overbought zone has arrived at an attractive zone with a positive trend reversal indicated to signal a buy and has much upside potential from the current zone. With the chart looking good, we suggest buying the stock for an upside target of 230-250 keeping the stop loss of 164.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.