IRFC shares down 36% from one-year high level; what's next for this multibagger rail PSU stock?

Shares of Indian Railway Finance Corporation Ltd (IRFC) continued their losing run for the third consecutive session in Wednesday's trade. The stock slumped 9.32 per cent to hit a day low of Rs 124. Considering this price, it has slipped 35.69 per cent from its one-year high value of Rs 192.80, a level seen earlier this year on January 23. Although, the multibagger counter has rallied 387.23 per cent from its 52-week low of Rs 25.45, hit on March 28 last year.

The scrip saw heavy trading volume today as around 1.32 crore shares were last seen changing hands on BSE. The figure was higher than the two-week average volume of 42.19 lakh shares. Turnover on the counter came at Rs 170.15 crore, commanding a market capitalisation (m-cap) of Rs 1,64,989.89 crore.

Technical analysts largely remained divided on the counter. One of them suggested that IRFC looked 'bearish' on daily charts. Support could be seen at Rs 120. Resistance may be found around Rs 140 level. And, a decisive breach above the said resistance zone if required for further upside.

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "Support will be at Rs 120 and resistance at Rs 140. A decisive close above Rs 140 level may trigger a further upside till Rs 150. Expected trading range will be between Rs 115 and Rs 150 for a month."

AR Ramachandran from Tips2trades said, "IRFC stock price is bearish on daily charts with strong resistance at Rs 140. A daily close below support of Rs 127 could lead to a downward target of Rs 108 in the near term."

DRS Finvest founder Ravi Singh said, "The stock has taken support at Rs 120. One can consider initiating a long-term position for a target of Rs 145, keeping stop loss placed at Rs 110."

The counter was trading higher than the 5-day, 10-, 20-, 30-day and 50-day simple moving averages (SMAs) but higher than the 100-day, 150-day and 200-day SMAs. The stock's 14-day relative strength index (RSI) came at 30.36. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 29.60 against a price-to-book (P/B) value of 3.75. Earnings per share (EPS) stood at 4.62 with a return on equity of 12.66.

In the December 2023-24 (Q3 FY24) quarter, the rail PSU's net profit fell 1.78 per cent to Rs 1,604 crore from Rs Rs 1,633 crore in the year-ago period. Revenue from operations, however, rose 8.43 per cent to Rs 6,742 crore in Q3 FY24 as against Rs 6,218 crore in the corresponding period last fiscal.

IRFC borrows funds from the financial markets to finance the acquisition or creation of assets which are then leased out to the Indian Railways or any entity under the Ministry of Railways. As of December 2023, promoters held 86.36 per cent stake in the 'Navratna' PSU.