Morning, Puneet, and good morning, friends who are attending this con-call. As CEO, this is one of the heartening mornings for me when numbers of the companies are beating the guidance and as well as expectation of the streets.

The job of CEO becomes easier. Today is one of the easier days for me after a lot of difficult times and difficult days to reach these numbers.

As I was talking in the morning with one of the TVs, numbers are not manufactured, they are earned. IRFC on embarking on its 2.0 journey, that is diversification journey, if you look at the last six quarters of the company, out of six, five quarters the profit after tax has grown in double-digit except the Q4 of last FY where provisions were made for new businesses where 1% for greenfield and 0.4% for brownfield provisions are to be made as per RBI norms.

It's a very satisfying day talking in the con-call that consistently for the last six quarters in our diversification mode, this company is growing. As I always say that when you talk about all the ratios, every ratio emanates from profit after tax.

If a company is not making healthy profit, healthy growth in profit, none of the ratios will show positive trends. If I give a picture that in the last six quarters, five quarters the company's profit after tax has grown in double-digit, you can see at the numbers that all the ratios and everything will be having a positive trend including net interest margin.

Apart from the good numbers, that is for H1 more than 20% rise in revenue and more than 10% rise in PAT, I would like to also talk about and share my other views to the shareholders at large where in the past when we embarked on the journey of diversification, few questions were really coming to the mind of the investors that for the first time we are going on diversification apart from single client model, what is the team that we are having for appraisal? I want to inform all of you that in last one year, the number of employees in IRFC has grown almost double.

You can think of the kind of manpower required that we have added. In my company, I always say the way we cherry-pick the assets, we cherry-pick the talents.

Every talent that we have added to our system, they are all best-in-class that we could get in the country. Top of it, I also want to share a very unique model that I follow as CEO here, that is the model of mentoring and mentorship.

To put on record, my Chief Risk Officer is a veteran from the NBFC business. He has been Director Finance of REC.

After that, he is here as Chief Risk Officer, and he is also donning the hat of mentoring all the young minds, making them very, very alert about the kind of compliances that is required. We have got our Advisor Chief, she was our Director Finance earlier and she comes from the stable of PFC, working there for last 30 years.

She brings all the knowledge that is required for borrowing side and she's not only mentoring, she's giving very active advices to the company on those lines also. My Chief Compliance Officer is a veteran from the industry coming from the PNB side.

We have got our advisor, one more advisor from REC side who has retired and they are advising us on the appraisal side. We have created the grid of mentors who are shaping, guiding the young minds who are doing the appraisal, borrowing, and everything.

This is something that I wanted to share, and let my investors be assured that the kind of team that IRFC has created now is one of the most robust that one can think of. The other thing I wanted to share with you that with the training of the railways, we are very, very particular about oversight and compliances.

Whatever RBI wanted us to do, whatever CAG wanted us to do, whatever internal auditing wanted to be done, in fact, I forgot to mention you that our Head of Internal Auditing is a veteran from government with all the experience of more than 35 years. We have put all the compliance thing right in the place, and we are trying to be best in the class in the country in relation to any of the banking or NBFC system.

We have got the positive feedback from RBI as well as CAG where consecutive third time nil comment has come. Oversight, compliances, ERP, all go hand in hand with robust results.

Top of it, we also have to look for a long pipeline. While doing the con-call, I'll be talking about the exciting time that we are going to have with all the announcements from the railways also.

Apart from that, the good business that we are doing in non-railways entities in the railway ecosystem where we are garnering higher margins. Taking two together, we'll be talking about the exciting time going ahead and maintaining and sustaining the growth that we have done in the six quarters, trailing six quarters, including this particular one.

With this, I invite you all to have a discussion. Thank you.

I've two questions. My first question to Mr.

Dubey is beyond the regular outlook, just want to understand what are the top two to three execution priorities you are focusing on in the next few quarters? Alongside that, what do you see as the biggest risk in terms of railway capex, asset growth opportunities, or funding, and how are you preparing to manage them while strengthening IRFC's role in the finance space?

That's my first question. I'll ask my second question after this.

Thank you.

You talked about risk of the railway funding or what? I didn't get that.

Can you repeat again the second part of your first question?

Yeah. I just want to understand the key strategic actions you are focusing on, such as maybe expanding the asset base, diversifying the finance opportunities, along those lines.

Can you give some guidance? No,

I got your question. Yes, immediate first part was first part of your question was, what are our immediate disbursement targets?

Yes. Last year, when we started diversifying, all ₹35,000 crore that we disbursed, that were non-IR disbursement.

This trend will continue for this FY. Next, H2, you'll find that we'll be lending to metro, we will be lending to port, we will be lending to renewable energy, we will be lending to thermal power gencos who are having link with the railways, we will be lending to maybe few road linkages also.

These are all in pipeline, almost ready to be disbursed in Q3 or early Q4. To answer your question in a very clear manner, the guidance that we have given that in FY27 also we will be surpassing our disbursement that we did last FY, and that guidance remains intact.

Now, the second part of the question that you asked is more exciting because this funding that we're doing right now, that will be finishing. It won't be continuing for long because ticket size is not more than ₹20,000 crore or ₹10,000 crore, like this.

The second part that you mentioned about railways, if you're following our honorable Minister Railways and also the honorable Prime Minister, what he announced, there is a sanction of dedicated freight corridor from Dankuni in eastern part to Surat in western part. This is 2,000 km plus, this costs around more than ₹3 lakh crore.

There are seven high-speed rail corridors that are already sanctioned and very actively being pursued because country is moving towards Viksit Bharat kind of thing. Railways has also announced eight freight lines where they will be going on JV, joint venture model, or PPP model.

Overall pie that comes out to be is more than ₹20 lakh crore. Now, once we have our hand on these pies, these are going to continue for next minimum 10 years.

Precisely the first half of this FY, we are actively engaging with all the stakeholders within the railways as well as the bilaterals. Because, you see, the pie is so big that IRFC alone also won't be able to fund all, everything.

What is happening is that we are kind of being the sole financing arm of Indian Railways, are acting as aggregators. We are already talking to, my team is already talking to World Bank, to other multilaterals, as well as domestic players, and we believe that by end of this FY, this whole model will be in place and the way you follow the government.

Because our disbursement is completely aligned to the aspirations of government of India. If you believe that, yes, government of India is going to have this dedicated freight rail corridors, if you believe that government of India is going to have this high-speed rail corridors, if you believe that government is really going to have four-laning of the tracks, then you believe that our hands are completely full with the kind of business coming in next 10 years.

That is what I'm talking to you. Maybe Q3, when we come out to you, we'll be giving you clear numbers and the guidances what model is going to be followed, but right now, what is available in the public domain, I'm only repeating that we are completely in sync with the ministry, both ministry: Ministry of Railways, Ministry of Finance, as well as other multilateral, bilaterals trying to get a solution where IRFC will have the first right on the pie.

That pie, I can give a flavor. That pie will be going forward, maybe from FY28 onwards for next decade, minimum ₹50,000 crore every year coming from the Indian Railways table.

Also to mention you, now that we have started diversification, we are not going to stop funding to non-railway entities in the railway ecosystem. You will see hand by hand looking at us funding the metros, looking at us to funding government ports, looking at us to fund the renewable requirement of the Indian Railways.

It is now that we have started our journey, maybe 20 FY28 onwards for non-stop 10 years, you will find that this kind of disbursement maybe in tune of ₹50,000 crore plus minus will be continuous growth for Indian Railways Finance Corporation.

Thank you. My second question to Mrs.

Deepa Kotnis is, from a financial point of view, what key risks or challenges do you anticipate in the coming quarters? What specific measures have been taken to manage net interest margin, borrowing costs, asset quality, and balance sheet strength, especially in an environment of changing interest rates and large funding needs?

Thank you.

Your questions are akin to asking question for her that she will take over as CEO of the company on the lighter vein.

Thank you, Mr. Patil, for your question.

IRFC has already got a very diverse borrowing portfolio. We are very actively looking at reducing our WACC by increasing the share of 54EC bonds and also ECB so that borrowing cost, we already are least cost amongst other NBFCs, and we hope to continue the same thing.

We hope to continue in the same way because we are, at the moment, we are 60 6.55% is our WACC compared to other NBFCs, which is much higher. So, 50 bps lower.

We hope to continue the same way.

Thank you, and best wishes.

You can ask me again because I think I noted down borrowing cost and NIM. The question went a little fast, you can repeat, perhaps.

No, if you have any guidance on that, please share. Otherwise, my questions have been answered.

Okay.

Okay. Thank you.

Good,

good.

Hi, sir. I just wanted to understand what is our internal three, four-year target in terms of AUM growth and how aggressive we will be in terms of disbursements?

Because I think the ₹5 lakh crore AUM target for this was supposed to be for this year, but I think we've missed it once or twice. Just wanted to understand the internal vision and our growth targets.

As I mentioned to you, we stand by the target of reaching near about ₹5 lakh crore, maybe more than that, maybe ₹1,000 or two ₹1,000 missing on that is fully intact. If you look at our journey in of IRFC 2.0, we started at ₹4.60 lakh crore.

4 lakh ₹4,60,000 crore on the beginning of FY26. We ended up the year at ₹4.85 lakh crore.

That upward journey was there. This year also, taking into account of whatever payments, capital recovery that we're getting from the railways, we are completely comfortable, hopeful.

We know what assets we are going to disburse in next H2. I can assure you that the way we have beaten the guidance for our revenue, the way we have beaten the guidance for our PAT in not one quarter, but consistent two quarters at H1, rest be assured that asset under management also will be reaching near ₹5 lakh crore, maybe crossing it, maybe by the end of Q3 only, you'll get the flavor that we are almost there.

End of the year, for sure, the way we did last year because bulk of our disbursements are done in H2, we have already things in place to disburse. Now, I'm again repeating very clearly for all the investors, we are not chasing growth of AUM just for it.

There is a reason behind that. You see, all my asset under management nearly 90% plus today also stands with the railways where the NIM is only 1.3% or in absolute terms, 35 paisa margin on cost plus.

You look at the beautiful and sweet spot for this company. Whatever non-IR business that we are garnering, here the margin is minimum two times and at times it is three times and 3.5 times also.

What will happen that even if my AUM growth is not very robust, it won't be growing in double digits, that's fine. My PAT will always be growing near to double digit for the fact that whatever assets we are replacing was of 35 bps, whatever assets I'm adding is more than 100 bps.

The yield will be nearly three times of what we were doing with the Indian Railways. Understand very carefully that even if I'm maintaining the AUM size of ₹5 lakh crore, you rest be assured that my PAT will be growing nearly to 10%, not for a year or two, but if we continue with this mode and the way we have forecasted that by 2030, our mix will be 60% pure railways and 40% will be diversification, rest be assured that till 20 2030, there's no look back.

PAT of this company will be keep growing year-to-year on that lines. I hope I have answered your question.

Sure, sir. Thank you.

Yeah. Hi.

Good morning, sir, and congratulations. Just wanted to understand how is our loan priced in the non-railway businesses?

How frequently are the interest rate revised there? The context was in the rising interest rate scenario how fast can we pass on if there is an incremental increase in the cost of fund?

That's one.

Manish, you have asked a very nice question because nobody was talking about these things. You are very right.

There is a repo enhancement by 25 bps. Not only that, I must add that also for you and other people who are listening to us or who will be reading our con-call later on because most of the people read the con-call later on.

There is increase in TONAR also by two back-to-back TONAR increases are 25 bps, 25 bps. We are one of the aggressive consumers of yen.

I tell you the numbers. In terms of yen consumption, last year we did nearly $2 billion worth of dollars.

We started with 1.8%, with TONAR increase also we are landing somewhere at 2.25%. The things which are passed on on cost-plus model, it's a win-win scenario for both because nobody gets a loan less than 3% in the country.

Even where we are taking it on our books, when we are doing a very conservative hedging, my cost of hedging has not crossed 6.3%. There are hedging at 5.9 also, there are hedging at 6% also, and the latest that we did during this turmoil of Hormuz also, it is 6.3%.

You see our overhead cost is nearly 15 paisa only. We don't add much to the cost of borrowing that we get.

On yen side, I want to confirm to you that despite the fact that TONAR has gone 50 bps ahead in only three, four months, maybe one more revision comes, we are extremely comfortable with those kind of rates that yen is offering to us. Now coming to domestic market, and answer to your question, there are reset of three months, there are reset of one month, there are also reset of one year.

It acts both ways. It at times helps us also, at times helps the borrower also, but rest be assured that it doesn't impact negatively to us much for the fact that our total borrowing portfolio as my CFO mentioned is varied.

We are not only having the term loan from the bank only, it is only around 25% of my total mix. Overall we always have this cushion of 20, 30 bps of any kind of such happenings.

The beauty is on the both sides, when we were funding the Indian Railways, we remained insulated. Either for positive or negative, my margin of 35% only was there.

It was on the lighter vein not very exciting business that your profit is fixed, whatever happens in the world, it doesn't affect your profit as a company. Now, when we have started diversification, we have taken into account all this fluctuations that can take place.

In every scenario what strategy we have followed is that we must make at least a margin of 90 paisa, 85 paisa minimum, and my ALM team is very, very particular, they are monitoring it on a real-time basis, maybe on a weekly basis reporting to the top management. Not much of impact, as I told you.

Yes, we also have the flexibility of switching away from the term loans when they are getting costlier to other instruments. If RTL becomes cheaper, we have the flexibility to go back to them and use that also.

That is what the borrowing team does in a very smart manner. As my CFO mentioned to you, we are maintaining country's best WACC, weighted average cost of capital, that is 6.55% that we did last year.

This year also we hope to maintain that despite the hardening of the rates. If we are able to garner 30 or 40 bps cheaper resources than the peers, you can understand what wonders it can do to us in terms of ensuring our margins, as well as competing for RFP for the best-class assets and winning it.

Precisely that is the foundation from where IRFC is doing consistently excellent results in terms of PAT for last six quarters, and I believe leading the management team here that this success story will continue in the similar manner as you have seen in the last six quarters. Thank you.

That was helpful, sir. One more question I had was on prepayment rates.

Two of your, maybe government lenders, have been facing prepayment pressure in last 1 and 1/2 year. Is there any kind of prepayment pressure for us visible right now or

[unclear]? Puneet, was there

Yes, sir. Am I audible?

[foreign language] Hello?

My question was on the prepayment rates. Some of the government lenders were facing prepayment pressure in last one year.

Is there any prepayment risk for us in our business, especially in the non-railway business?

Sir, were you able to listen to my question? Huh,

yes. Please go ahead.

My question was on the prepayment risk. Some of the state lenders are facing prepayment risk like REC, PFC of the world.

Are you also looking at any pressure on the prepayments? Bhaiyya,

this is the only pressure that I'm not having. I'm having all the other pressures with me, but thank you for asking this question and making me feel good about it.

I am perhaps the only NBFC in the country who is not having this pressure, and there is a reason behind this. The reason is my unique selling point, wherever I have gone for the last two years, I have given three comfort to my borrowers.

Number one, there is no prepayment penalty. Listen to it very carefully.

I have given first proposition to all my prospective borrowers that listen, we are not putting any prepayment penalty while others, you know better than me, that what kind of penalties being put on that. Number one.

Number two, we are saying that there's no floor price. If the benchmark is having a decrease, I'll pass on the benefit to you.

If the benchmark is going up, I will pass on the risk to you. These two things have really gone up well with my customers, my borrowers, and they have got tremendous confidence and rapport with us.

Answer to your question, why we are not finding the pressure of prepayment, for the fact that we are cheapest in the market. We sell ourselves like this.

If we are cheapest in the market, why somebody will prepay my loan? Morning I was thinking about it.

The basic thing that were taught in the management school is that leveraging the business is always a profitable business. Obviously, everybody would not like to put all their equity in the business.

When you want to leverage, if you are getting best-in-class kind of lending rates, why somebody will prepay? On the lighter vein, asking your questions, I get a feedback that for the last two years we are disruptors in the market.

We say that we are positive disruptors in the market. For the fact that we are a government company and if we are bringing in our efficiency of low overhead cost, small team, taking bigger responsibilities, and serving the government entities, it is always good to pass on the money on a win-win scenario where I'm making a handsome profit and I'm passing on the loan at a very cheaper rate.

In fact, if you see my last year portfolio, the others' prepayment majority we are refinancing it. That's a business proposition for us.

Now we have proven in the country that if anybody wishes to have a lower rate, proving to us that they are best-in-class assets, their ratings are A, then we are looking for them and we are arranging cheaper loan. As my CFO mentioned, we are having the lowest WACC, perhaps, in the country.

I hope I have answered you.

Yes, sir. Thank you very much.

That was helpful, sir.

Hi. Thanks for giving me opportunity to ask a question.

I was following the company and performance quarterly basis, and felt good every time I saw the results and the kind of improvement in the margin and everything happened. I'm little bit concerned as an investor what happened in last two years in terms of stock price and the way it has moved in 2 years, due to either OFS or anything else.

What are your suggestions to government or even for shareholder to understand how we can have better value in near future or even a longer-term in terms of share price and dividend distribution?

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Improve [foreign language]

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Thank you, sir. Actually, [foreign language] I want to hear long-term projection what is going to be in next 10 years or 20 years kind of so that if there is a chance to build a wealth, I can be there.

Right.

I think we have given enough flavor to you. Rest, I request and advice you that you keep following us.

We keep communicating very proactively, and we are very transparent in sharing what all we are doing and what railways is doing also. You kindly follow what railways is doing also.

Thank you.

Thank you.

Thanks, Sunil. I think I've spoken enough with all clarity.

Nothing more to add. Just to sum up that the way we are giving out the numbers that we've come out in this FY for H1, we very seriously believe that this growth story will continue.

The numbers that you have shown in H1 will be kind of replica of what is going to be in S2. Our AUM, yes, we're all geared up that we'll be doing better than what we did last year.

All ratios that people follow, we believe that the way ROCE of this company in this H1 to H1 has grown in double digit, nearly 14%. Even ROTA has also grown near 5%.

We believe that return on equity is also positive. All ratios as I always say that if you follow the profit numbers, PAT numbers, every ratio comes out of that.

We believe that the diversification story that IRFC has started on will continue in a positive manner. When we meet after Q3 results, we come out with the same number or even better number.

Thank you so much.