IRFC eyes project refinancing, funding of metro & rapid rails as new growth drivers in its bid to chase “high margin” biz

Manoj Kumar Dubey, Chairman and Managing Director & CEO, IRFC 

Indian Railway Finance Corporation (IRFC) is moving beyond funding pure-play railway projects, its traditional role where it supported rolling stock manufacturing and rail line laying. The company is “diversifying” into funding PPP rail projects, metro railway, and rapid rail projects, high margin offerings, apart from tapping into refinancing of existing loans for ongoing railway projects, its Chairman and Managing Director, Manoj Kumar Dubey, said.

“These (new) businesses have a 2x–3x margin and are attractive for us,” he said during a post result investor conference call. The company will, however, funding projects, “within the railways ecosystem”, as permitted by its Memorandum of Association (MoA) and Articles of Association (AoA).

In Q4 (Jan–Mar), the first quarter after it took a call on diversification, it won three bids securing funding for around ₹14,000 crore of assets. And this include a ₹5,000 crore term loan to NTPC Renewable Energy “for capital expenditure and debt refinancing”. Disbursements are expected “soon”.

The company remains optimistic about public-private partnerships (PPPs), with government-backed railway projects expected to drive demand.

Competitive edge

IRFC’s competitive edge lies in its low-cost funding, with operational costs under 0.1 per cent, robust capital adequacy, and a pristine zero non-performing asset (NPA) record.

Backed by access to low-cost funds through bonds and global markets, IRFC’s diversification strengthens its market position.

“We’re outpacing banks and NBFCs, with these projects having 2x to 3x margins,” Dubey said, crediting IRFC’s ability to offer attractive lending rates.

For FY26, IRFC is targeting disbursements of around ₹30,000 crore, which, given the higher margins, would be equivalent to nearly ₹90,000 crore of traditional Railways lending, the company top brass explained.

Refinancing projects

Although IRFC completed no refinancing projects in Q4FY25, the management highlighted a strong pipeline. “Refinancing is a key priority,” Dubey said.

With disbursements already underway, IRFC aims to capitalise on this niche, replacing high-cost debt with affordable loans.

The company projects ₹10,000 crore in loan repayments over FY26-27, aligning with its long-term financing model for infrastructure.

IRFC continues to dominate railway financing, fuelled by Indian Railways’ ₹2.65 lakh crore FY25 capex. The company anticipates a “healthy top and bottom line” as it balances railway and non-railway growth.

Fundraising

The Board has already approved a fund-raising of ₹60,000 crore so far, Dubey said.

IRFC fundraising would be through a mix of tax-free bonds, taxable bonds on private placement or public issue basis, including capital gain bonds, government guaranteed bonds, government serviced bonds, zero coupon bonds, perpetual bonds, subordinated bonds, market-linked bonds, ESG (environment, social and governance) bonds, separately transferable redeemable principal parts (STRPP) or any other bonds or debentures.

Fundraising may also include loans from banks and other financial institutions, institutional financing, securitisation of future lease receivables, ECBs and so on at appropriate time, keeping in view, the market conditions and requirements, the company top brass clarified during the investor call.

Published on April 29, 2025