IRFC Shares Surge 12% in 3 Days: Understanding the Recent Rally

If you have been tracking the stock market this week, you might have noticed a significant move in railway stocks. Specifically, the Indian Railway Finance Corporation (IRFC) has been in the spotlight, surging nearly 12% to 13% over the last three trading days.

As of December 23, 2025, the stock has found firm support at the ₹108 level and is attempting to recover after a downward trend that began in June. In this blog, we will break down why this surge is occurring, the strategic moves the company is making, and what its latest financial reports reveal.

The "Budget Effect" and Railway Stocks

Historically, railway stocks in India tend to gain momentum as the Union Budget approaches. We saw a massive example of this in early 2024, where IRFC shares more than doubled in just two months leading up to the Interim Budget.

As we move closer to Budget 2026, investors are once again anticipating big announcements for the railway sector. This "pre-budget rally" is a common trend where the market expects increased government spending on infrastructure, which directly benefits companies like IRFC that fund these projects.

Why is IRFC Rising Right Now?

Several factors have come together this December to drive the stock price upward:

1. Passenger Fare Rationalisation: Indian Railways recently announced a slight increase in passenger fares for long-distance travel, effective December 26, 2025. This move is seen as a positive step for the financial health of the railway ecosystem.
2. Successful Fundraising: IRFC recently raised ₹2,981 crore through its first-ever Zero-Coupon Bond issuance. A Zero-Coupon bond is a type of debt that is bought at a discount and does not pay regular interest; instead, the profit is realised when the bond matures at its full face value. The issue was highly successful, receiving bids worth over ₹7,500 crore.
3. Strategic Expansion: Beyond just funding trains (rolling stock), IRFC is now expanding into financing metro projects, port connectivity, and Public-Private Partnership (PPP) initiatives. Its "Navratna" status also gives the company more functional autonomy.
4. Sector-Wide Rebound: It isn't just IRFC; other railway PSUs like RVNL and IRCON are also seeing a recovery, indicating a broader return of investor interest in the sector.

A Look at the Financials

To determine if the company is fundamentally strong, we can examine the latest data for the half-year ended September 30, 2025.

Key Performance Indicators:

• Profit Growth: Despite a slight dip in revenue from operations (-2.76%), the Profit After Tax (PAT) grew by 10.45%, reaching ₹3,522.67 crore compared to the same period last year.
• Assets Under Management (AUM): The company manages a massive portfolio of ₹4,61,973.43 crore. Most of this (over 98%) is exposure to the Ministry of Railways, which is considered very safe.
• Asset Quality: One of IRFC’s strongest points is its GNPA (Gross Non-Performing Assets), which stands at NIL. This means the company currently has no bad loans.
• Tax Liability: Due to its unique business model and status, the company’s tax liability is currently NIL.
• Net Interest Margin (NIM): This stands at 1.55% (annualised), which represents the difference between the interest income earned and the interest paid out.

Conclusion

The recent 12% jump in IRFC’s stock price is a combination of technical recovery from recent lows and positive news regarding fundraising and government policy.

While the stock is still trading below its June high of ₹149, the combination of strong profit growth, zero bad loans, and the upcoming Budget 2026 has brought buyers back to the table. For beginners, IRFC remains a unique company because it acts as the dedicated "bank" for the Indian Railways, making its stability closely tied to the government's infrastructure goals.

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