With increased investment and government support, the railway sector in India is on a massive growth trajectory. As per a recent analysis by ICRA, companies in the railway sector are expected to see a revenue growth of 5% in FY 2025-26 in India.

As the financing backbone of Indian Railways, the Indian Railway Finance Corporation (IRFC) is at the heart of this expansion, as its role is crucial in funding infrastructure projects. If you’re wondering whether this company is capitalizing on this boom or lagging, then this blog is for you. In this article, let’s understand the role of IRFC, its financial performance, and future projects. Let’s start!

Understanding IRFC’s Role

A Navratna PSU, IRFC, was established in 1986 under the Ministry of Railways. It mobilizes funds from domestic and overseas Capital Markets. It has played an important role in helping the Indian Railways grow.

Its primary function is to raise funds for the Indian Railways to facilitate the acquisition of rolling stock, infrastructure development, and project financing. Therefore, the company borrows funds from financial markets with the aim of creating or acquiring assets that are leased out to the Indian Railways.

Financial Performance of IRFC

With no tax liability and a net worth of ₹52,667.77 cr (up to Q4 FY25), IRFC reported a net interest income of ₹6,568.90 cr in FY25, up from ₹6,428.85 in the previous year. The company also recorded a PAT of ₹6,502 cr in FY25, compared to ₹6,412.10 cr in FY24. Revenue from operations grew by 1.89% to ₹27,152.14 cr in FY25.

However, in Q4 of FY25, the company’s net profit dropped by 2% YoY to ₹1,682 crore, even though revenue increased by 4%. The dip was mainly because of rising expenses of employees and higher finance costs.

IRFC’s net profit margin also saw a dip from 26.51% to 25.01%, with the operating margin going down to 25% from 26.47%. This tells us that while the company’s Q4 FY25 results might be concerning, the overall long-term fundamentals and financial performance of the company are strong.

Stock Performance: Volatility Ahead?

IRFC’s stock has been on a rollercoaster. IRFC share price has gone down by around 46% from its peak in the last 10 months. The stock dipped by 8% in the last 3 months, and in 2025, the share price has dropped by 14.87% year-to-date (YTD).

Despite the short-term decline in share price, the company’s stock price has performed well in the long term, with a stock price jump of 300% over two years and 465% in the last three years.

Aiming to support upcoming railway projects, IRFC’s board has approved collecting around ₹60,000 crore for FY26 from domestic as well as international markets. This move aims to ensure that the company has sufficient funds to finance the ambitious plans of the Indian Railways.

Such proactive steps indicate IRFC’s commitment to aligning with the sector’s growth, but the effectiveness of these measures will depend on execution and market conditions.

Conclusion

IRFC is undeniably a key player in India’s railway expansion, providing essential financial support for infrastructure development. While its financial performance shows growth, the pace is moderate, and stock volatility indicates investor caution. The company’s strategic initiatives, like raising substantial capital for future projects, are promising.

However, IRFC must enhance its financial efficiency and adapt to the sector’s dynamic landscape to make the most of the railway sector’s boom. If you’re planning to invest in railway stocks, it’s essential to stay informed about the company’s performance and the broader industry trends to make well-informed investment decisions.