Buying an index fund is an excellent way to achieve compound wealth in the stock market. But boosting your wealth significantly may require some above-average stocks. For instance, you can buy the Indian Railway Finance Corporation Limited (NSE: IRFC) share price, up by 55% in the last year. irfc share price has offered the best market return recently, of around 2.6%, excluding dividends. If IRFC can sustain this for the long term, investors will really profit. Remember, businesses develop over the long term, so you might not get the whole idea of a long-term trend from the reflection of one year only.
While the recent few weeks have proven to be lucrative for investors of Indian Railway Finance, let’s discuss whether fundamentals drove its performance in the last year.
IRFC is Indian Railways’ financing arm that debuted in the stock market in January 2021. It had started below the IPO issue price of Rs.26. The wholly-owned subsidiary under the Ministry of Indian Railways has a market cap of Rs.36.66 thousand crores. The valuation of IRFC stocks is more attractive than IRCTC.
irfc share price
A way to assess the change in the market sentiment with time is to understand the interaction between the share price of a company and its EPS or earnings per share.
If you look at the irfc share price and EPS of irfc, you will find that the latter dropped by more than 1% in the last year. So, you can’t be assured that despite a drop in EPS, the company managed to do good business over the previous twelve months. Therefore, we should check some other fundamental data as well to get an explanation of the rise in irfc share price nse.
While a thirst for dividends may not be pushing up IRFC’s share price, the revenue boost of 8.3% over the last year has been likely to make the difference. A business is allowed to sacrifice its today’s profits to gain profits tomorrow.
Meanwhile, the CEO of indian railways
finance company is getting paid more than CEOs of other similarly capitalised companies. But the company itself has to grow its earnings throughout the year. It’s necessary to look at the earnings, cash flow and revenues of IRFC.
You have to consider the total shareholder return and, at the same time, the share price return for any company in the stock market. The TSR or total shareholder return incorporates the value of discounted capital raisings or spin-offs and dividends. It assumes that the dividends are reinvested. Apparently, TSR offers a vivid picture of a stock that pays dividends. The total shareholder return for IRFC in the last year was 64%, exceeding its share price return.
A difference perspective
IRFC boasts 64% TSR including dividends for the previous year. But the more recent returns have not been as impressive as the returns of the longer term, coming in at 9.8%. The market is seemingly looking at fundamental business developments before pushing the share price higher or lower. Looking at the irfc share price over the longer term as a proxy for business performance can be interesting.
But, it doesn’t provide us with a true insight irfc share price nse. You need to evaluate other relevant data and facts too.
Share price and share price target
IRFC shares have corrected almost 31% from the company’s 52-week high of Rs.37.10 on November 30, 2022. Last week, the stock was trading at a higher price on an intraday basis.
irfc share price has yielded a positive 33% return over the last six months and given a negative return of over 15% on a year-to-date basis.
Overall, irfc share price is better to look at than other shares of subsidiaries of Railways for its attractive valuations and being a financial company rather than an infra company.