IRFC shares surge 12% to hit fresh 52-week high; time to book profit or more upside possible?

Shares of Indian Railway Finance Corporation Ltd (IRFC Ltd) resumed their sharp rise in Thursday's trade after a brief one-day halt. The stock today jumped 12.33 per cent to hit its fresh 52-week high of Rs 44.64. The stock has jumped more than 32 per cent in the past one month. The counter turned multibagger, rallying over 103 per cent in a year. The company is scheduled to announce its June quarter results for the ongoing financial year 2023-24 (Q1 FY24) on August 11.

Recently, IRFC and RITES signed a memorandum of understanding (MoU) to explore avenues of mutual collaboration in the railway ecosystem and the transport infrastructure sector. As part of the MoU, RITES would offer consultancy/advisory services and assist in ascertaining the financial/technical viability of projects, while IRFC will provide financial services to projects/institutions that have got backward and or forward linkages with the Railways.

On technical setup, immediate support on the counter could be seen at Rs 42, followed by Rs 40 and Rs 38 levels. An analyst said fresh buying may be avoided as the counter saw good traction in the past few sessions, while another suggested existing investors to book profits at current levels. On the higher side, those who are already invested may hold it for a target of Rs 48, keeping a strict stop loss placed at Rs 37, one more analyst said.

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Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One, said, "IRFC has seen good traction in the past few trading sessions, leading to a strong surge in the counter to clock new highs. On the technical front, the counter has seen a volume-based breakout around Rs 36-odd levels and continued its upward march. As far as levels are concerned, the zone of Rs 36-34 is likely to act as sacrosanct support, before which the Rs 40-38 zone could cushion any blip. On the flip side, till the counter is able to sustain above the support zones, it is likely to trade with a positive bias. It could continue its march in uncharted territory, but at the same time, one needs to avoid being complacent and have a pragmatic approach in the counter."

Kush Ghodasara, CMT, said, "The stock has shown extreme bullish momentum in last 4 sessions. It has moved over Rs 36.80, which was acting as strong resistance since December 2022. Indicators have also confirmed bullish crossover suggesting that strong momentum can continue. Fresh position can be avoided as risk is to reward isn't favoring. Existing investors can hold with training stop loss placed at Rs 37 for a target of Rs 48 in few weeks."

AR Ramachandran from Tips2trades said, "IRFC stock price is overbought on the daily charts with next resistance at Rs 45.95. Investors should be booking profits at current levels as a daily close below support of Rs 42 could lead to target of Rs 38.85 in the near term."

The counter's 14-day relative strength index (RSI) came at 84.37. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-earnings (P/E) ratio of 8.20 against a price-to-book (P/B) value of 1.14.

The scrip has an average target price of Rs 32, Trendlyne data showed, suggesting a potential downside of just 26 per cent. It has a one-year beta of 0.84, indicating low volatility.

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.

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