IRFC shares surge 9% to scale fresh record high; can they hit Rs 50 level?

Shares of Indian Railway Finance Corporation Ltd (IRFC) rose sharply in Tuesday's trade, extending their gains for the third straight session. The stock jumped 9.08 per cent to hit a record high of Rs 41.70 over its previous close of Rs 38.23. Around 2.52 crore shares changed hands today on BSE, which was way more than the two-week average volume of 86.02 lakh shares. Turnover on the counter stood at Rs 101.61 crore, commanding a market capitalisation (m-cap) of Rs 53,789.97 crore.

Recently, state-owned RITES has signed a memorandum of understanding (MoU) with IRFC 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.

An analyst suggested that the stock has a medium to long-term target of Rs 50, while another said IRFC looked "bullish but overbought".

Osho Krishan, Senior Analyst, Technical & Derivative Research at Angel One, said, "IRFC has seen good traction from the past couple of trading sessions, leading to a strong surge in the counter to clock new highs. On the technical front, the counter is expected to continue the run in the comparable period. As far as levels are concerned, the zone of Rs 36-34 is likely to cushion any short-term blip, while sacrosanct support lies around the consolidation zone of the Rs 32-31 level. On the flip side, till the counter is able to sustain above the support zones, it is likely to trade with a positive bias and could continue its march in uncharted territory."

Manoj Dalmia, CEO of Proficient Equities said, "Investors can expect a medium to long-term target of Rs 50 and can accumulate at current levels."

AR Ramachandran from Tips2trades said, "IRFC is bullish but also overbought on the daily charts."

Citing technical charts, Aditya Gaggar, Director of Progressive Shares, mentioned a target price of Rs 49.

The counter's 14-day relative strength index (RSI) came at 85.63. 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 7.88 against a price-to-book (P/B) value of 1.10.

The scrip has an average target price of Rs 32, Trendlyne data showed, suggesting a potential downside of just 21 per cent. It has a one-year beta of 0.84, indicating low volatility.

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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.

Also read: IRFC shares recover 87% from 52-week low; can they hit Rs 50 mark? 

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