Analyst's Diary: There's more to the eye

Non-banking financial companies (NBFCs) in India are synonymous with high non-performing assets (NPAs). As per the Reserve Bank of India (RBI), their GNPA (gross non-performing assets) stood at 4.6 per cent as of September 2023. However, there is one NBFC that has no red in its books - IRFC (Indian Railway Finance Corporation). Founded in 1986, the company lends funds to the Indian Railways to manage its extra-budgetary needs. Simply put, if the funds provided by the government to the Ministry of Railways fall short, the IRFC will raise money from the market to meet its requirements. Since IRFC supports a government entity, akin to getting a sovereign guarantee (a promise by the government to pay a company's debt in case of a default), its NPA remains zero. Further, it boasts strong financials, as its AUM and net profit grew at an annual rate of 25 and 26 per cent, respectively, between FY18-23. No wonder that since April 2023, IRFC's share price has surged fourfold, causing its P/B value to jump from a discount to 4.2 times. Given the company's financial upswing, is it a worthwhile investment? Let's find out. How IRFC fares versus its peers A quick glance at th