Good morning, ladies and gentlemen, and welcome to Q3 FY26 earnings call of IRFC Limited. We have with us Mr.

Manoj Kumar Dubey, Chairman and MD and CEO, Mr. Randhir Sahay, Director Finance and CFO.

Now I request Mr. Dubey to take us through highlights of Q3 performance and outlook going forward, post which we will open the floor for Q&A.

Over to you, Mr. Dubey.

Very good morning, Mr. Manish, and good morning to all participants.

Very good morning from the team of IRFC. I am accompanied with my Director Finance as well as my principal HOD and HOD CEO.

We are very happy to talk to you today, post our Q3 results yesterday. Numbers must be already with you.

As we started this FY three quarters back, it was a new era for IRFC, being entering into a diversification mode, from single client system that we had for nearly 38 years to multi-client mode in the railway ecosystem. It was a little uncharted territory.

We had given ourselves a tall guidance of sanctioning assets up to 60,000 crore for the whole year, as well as without having any pipeline, prior pipelines disbursement targets of 30,000 crore. We worked really hard as a team for the first half, and based on those hard work and testing ourselves into the market through open bid procedures, quarter three has really been something where we got the fruits of our hard work.

When we ended on 31st December, this calendar year ending our quarter three, the numbers that came out is we have already surpassed our guidance given for sanction of assets. Our disbursement picked up in quarter three, and we have almost done three-fourths of what we said for ourselves for 30,000 crore.

As we said in the beginning that whatever assets we will be getting, the margins would be quite better than what we used to get from Indian Railways, in the line of 2x to 3x, precisely the same is happening, despite having very stiff competitions with lowering of repo rate from the banks also. Our inherent strength of having low overhead cost as well as our positioning in the borrowing market being zero NPA company, garnering cheaper rates, are helping us in passing out this benefit to our customers.

The highlights of Q3 were raising our ECB loan for the first time after a break of nearly three years. That too at a very, very attractive rate, perhaps best in the market that anybody got in yen currency.

We also tested zero-coupon bond, and perhaps we are the only company in the country who successfully did it in the calendar year 2025. We got a good rate also.

Overall, the company is well positioned now with a very healthy pipeline going forward, living to the expectations and the guidance that we have given that our PAT should grow every quarter, our NIM should grow every quarter, our asset under management should also grow every quarter. These are the three indicators of efficiency, and the yield which we are focusing on.

Going forward, the revenue of the company also will be looking up from next FY onward, as the agreement will be signed with Indian Railways, and the new assets that we are sanctioning, disbursement will speed up, and all this will be adding to our top line also. Overall, here we are after the end of the three quarters on a very solid ground of our IRFC 2.0 version, where we are remaining as the sole financing arm of Indian Railways, but also we are catering to the whole railway ecosystem at very attractive rates.

Thank you very much.

Over to you. Yeah.

Hello.

Please go on.

Good morning, sir. Sir, just wanted to have your explanation for the amount which is appearing in provision and written off as a line item there.

It has increased significantly in the current quarter. What is the reason behind it?

Because I guess we still don't have any NPA in our books?

You must be aware about the RBI guidelines. From 1st October onward, whatever assets that we are entering into agreement, there has to be some mandatorily some provisioning is to be done.

It is those provisions, which are just simply a provision. It is not NPA.

This is for everybody now.

Sir?

Your voice is not coming clearly. Please go ahead.

I'm saying these are standard asset provisions basically.

Yeah.

It is a standard asset.

Absolutely.

Okay.

Otherwise you can add this 50 crore into our profit, and you can safely say that our profit is 1,850 and nearly 13% not 10%, two years. Right?

Got it. Sir, as regards the AEM, I got the view that this is going to increase on a quarter-on-quarter basis.

Any sort of number or any sort of growth rate that we can look forward for, let's say for FY27 right now?

You see, when we started the year, we were really under hard-pressed conditions because for the last two years, nearly three years in fact, there was no disbursement to the railways, which used to be our single client. Now you see, how quantum jump is taking place.

In one quarter itself, we jumped from 4.6 lakh crore to 4.75 lakh crore. There are two things.

One, our base is very big. We are not a small NBFC.

It is already, 4.75 lakh crore. There are not many of the NBFCs which are running this balance sheet size.

Yes, what I said that we will be growing positively for the fact that whatever reimbursement will be coming from the railways for the old loans that we have given, we'll surely be disbursing more than that. Now how much more is a question which, we are also looking for an answer.

For the fact that there are two good things about us. We are not looking for any small ticket kind of business.

We are strictly into B2B, and our efforts are that we should look for the clients which are having potential of raising around 10,000 to 15,000 crore from us, and one ticket not less than 5,000 crore. This is the kind of B2B system we are looking forward to.

If, say, three or four more assets we garner in the Q4, you will put the numbers. Disbursement norm typically for a greenfield project, it takes three to four years, you disburse everything.

Numbers we won't be putting, but I can tell you one ballpark figure that this company's AUM will be hovering around 5 lakh crore, which is not a small thing. A.

B. This 5 lakh crore, plus minus, whatever we will be having for next three to five years, more and more assets with bigger margins will be added up.

Morning at CNBC and other TVs also I spoke about that in the next five-year plan, 2030 plan that we have made. In this 2030 plan, we are looking forward to a mix of 60-40, 60 coming from the Indian Railways and 40% of the mix coming from the railway ecosystem, where the margins are nearly three times of what we get from the railways.

Better you put a number on our name, better you put a number on our PAT. AUM, I can only tell you that it is going to grow, and it should be somewhere 5 lakh plus going ahead.

This is what we envision here in the company.

The timeline for the 5 lakh crore, is it a 2030 target, or in the near future only?

No, what we have set forth is a five-year target, where we are looking forward to 20 new entities for us, for whom we are doing cherry-picking and appraisal. These 20 entities, we intend to fund around 15,000 crore each.

So 3 lakh crore we wish to add through 15 entities only in the next five years. We are sitting over here at 4.75 lakh crore; 3 lakh crore we want to add in next five-year time through these 15-20 clients.

It comes out to be nearly 8 lakh crore. There will be some reimbursement from the railways also.

That is why I am not putting a specific number. What I answered to you is that we believe that going forward AUM of this company will be 5 lakh crore plus.

Understood, got the point, sir. Sir, just one clarification on the 40%, the non-railway ecosystem that we are looking forward to.

Are we facing any kind of competition? Because the other players, the PSU players in the space, basically they are having a slower growth rate right now, and they are trying to become more competitive.

Are we facing any competition out there in the 40% piece?

Mohit, we are here for competition. In fact, we are inducing competition.

We are strictly not in favor of any across-the-table discussions. We are a government company.

In fact anybody who is coming to us for across-the-table lending also, we are advising them to come out with an open RFP, right? Yes, the answer to the question is there is a very healthy competition for us for the fact that we are looking only for pristine, best kind of assets.

The moment you look for those kind of assets, which are A-rated, AAA-rated, obviously there is competition, but it suits us. It suits us on two counts: one, it endorses our view for zero NPA kind of asset; two, we were working all the way for 40 bps margin.

We are getting 100 bps margin, 120 bps margin, despite the competition. Our name is going ahead.

The answer to the question is competition; we are inducing competition in the market, and we are very happy doing it. We are getting good competition with banks also.

NBFCs are by and large not very competitive with us because of the fact that our overhead is low and our cost of borrowing is cheaper. Few kinds of assets, at times banks are really competitive with us, and we are very happy competing with both the kinds of entities.

Thank you. Thanks a lot, sir.

Good morning, am I audible?

Yes, Amit, please go ahead.

Yes, thank you for the opportunity, sir. Congratulations to the couple of members.

What is the expected execution timeline for 17,000 crore exposure where IRFC has emerged L1, and how much of this can realistically flow into FY27 AUM?

It is pretty much on line, and if you have information from somewhere, it is on the line. Agreements will be signed very quickly.

There is no issue on that. All due diligence is in place, legal things are being done.

As I mentioned in the first question that generally for greenfield projects, normally two to three years we disburse everything in the agreement.

sir, is there a long-term dividend payout policy that investors can anchor to, especially given the company's stable cash flow and nil credit costs?

Please say it again.

Yeah. Is there a long-term dividend policy?

Dividend policy is already in place. If you look at our dividends in the last five years, it will give a very— because we are a government company, on the lighter side, how it does, how it pans out.

If I understand correctly, we have been very steady in giving our dividends. This year interim dividend was quite higher than what we paid last FY.

Rest be assured, if the PAT is growing, dividend should also grow. This is my understanding, but the final call is taken by the board.

And

sir, the last question from my side, how does management internally benchmark the company's valuation as a sovereign proxy, an infrastructure NBFC, or a utility-like entity business?

Let us hear from our BD head. Currently, we are focusing on the good quality assets, and we are following the whole-of-the-government of India approach.

In the near future, we are envisaging that we would be funding only to the government entities and the entities which have a strong linkage with the government. Going forward, we will intend to fund only those infra projects which have a backward and forward linkage by following the whole-of-government India approach.

Thank you for the detailed response, sir, and all the best for the future. Thank you.

Thanks, Amit.

Good morning, sir, am I audible?

Yes, please go ahead.

Sir, I have been tracking IRFC since a couple of quarters on calls. What I understand is that our cost of funds is the lowest in the industry, which is approximately sub-5%, and earlier we used to make margin of 40 bps on railway projects, which is now 100 bps on, in the diversification plan 2.0, apart from railways.

You have been, earlier there was no need of credit underwriting or something on those lines because it was, Indian Railways is sovereign, there was no risk of default. Considering now we are moving into 60s to 40 trajectory with around, 20-odd new exposures being added of around 15,000 crore each in next five years.

I heard that you mentioned that all those entities will be linked to GOI backwardly or forwardly, but do we have some benchmark that it will be all AAA-rated? I think you gave loan to NTPC.

There still risk of NPA remains nil in this IRFC 2.0 approach as well? Or because the competition is pretty healthy, as you mentioned, but, the only benefit what we have is the lowest cost of funds.

Can you just throw some light why we have that benefit and what is the cost of funds as of, the recent weighted average cost of borrowing?

You understand the fact that you mentioned in the beginning that whatever low overhead cost that we had, earlier it was all being passed on to Indian Railways as a single client. Now that we are giving loans to the entities who are having many linkages with the railways, of course this 70 to 80 bps benefit that we had as lower cost of overhead, that is being now divided between the customer as well as ourselves.

Nearly, I believe, 40 to 50 bps is coming out of that lower overhead cost to our KTHS profit. Perhaps you wanted to know about our risk factor that going ahead with 40% loan.

You see, we funded one for DFC, Dedicated Freight Rail Corridor. We funded for NTPC.

All our assets are all in public domain. You can see their ratings.

Ratings is mentioned. We are obviously going for all A-rated assets.

We are cherry-picking even the gencos. We are not going for any gencos or transcos who are not rated A generally in the system.

Our cherry-picking in all the ecosystem that we are doing, it is up for to be seen by the investors or the potential investors. We believe that those government entities which are having very strong balance sheet, strong cash flows, and the kind of new venture that they are going in, there is absolutely negligible chance of NPA.

A. B, yes, as per the RBI guidelines, even for an entity like DFC, CIL, where the payments will be coming directly from GOI to us, still provisioning norms are there for capital adequacy as well as for the assets.

Yes, those things will be there. Our capital adequacy or CRAR today also is nearly 160% against the required number of nearly 25%.

We have a lot of leg room still to go for these kind of assets. A.

B, as you said, provisioning has to be done, and it is being done by everybody in the line of RBI guidelines. Those provisions are just provisions.

They are not any actual cash hit on the balance sheet. Yes, we are entering into the ecosystem other than railways, but our appraisal team is very, very particular about the fact that what kind of assets we are cherry-picking.

That will remain our mainstay, and we believe that by having this kind of scenario within the whole of government approach, we believe that we will be able to maintain our pristine zero NPA system going ahead also.

Sir, and what is the cost of funds, weighted average cost of funds as on date?

You see, cost of fund is sub-7%. We can't give you the numbers, but if you look at our numbers, we raise our debt discount zero-coupon bond at 6.80 for 10-year bullet payment.

We raised five-year bond some time six months back at 6.5%. We raised our ECB loans in the Japanese yen at a very, very attractive rate, and even if we add five-year hedging cost on that, it is coming somewhere around 6.2-6.3.

If you add all together with the repo rate coming down, our RTM also is quite attractive nowadays. It keeps varying every year depending on the mix and the kind of rates that is being offered in the market.

Overall, as you rightly mentioned and you are tracking us, that we are nearly 20 to 30 bps cheaper than anybody in the ecosystem as our peers. Overall cost is always remaining less than 7%.

This is what now at times it may be quite attractive even to 6.5-6.6 levels. If you ask for the target, we are looking forward to borrowing mix which is cheaper than the DFC rate.

This is what at IRFC we are aiming for. I hope I answered your question.

Sir, last question broadly, it's all floating rate linked, right? External benchmark or EBLR?

Not necessarily. When we are going for the—I mean, we have got all kinds of mix.

Bond, of course, bond is a fixed rate. If you are buying any five-year, 10-year bond, or 15-year bond, rates are fixed.

Banks, of course, it is linked to either T-bill or repo rate, whatever you have. In ECB market, it is linked to the currency fluctuation mainly, and of course the hedging cost if we are going to hedge.

Still after adding 100 to 120 bps to this, still, our rates are still competitive as compared to competition rate, which is primarily banks.

That is why we are winning the bids. We are losing few also.

It's not that we are winning everything where we are bidding. That is the best part.

One of the good things that we take out of participating to RFP, whatever asset we have participated, participations were as large as seven to even 15 participants from the financial sector. That is a reinforcement of the fact that we are entering into the area where 10 to 15 companies are doing their due diligence and they are finding the assets as pristine.

Whether we win the bid or we lose the bid, we are clear with one thing, that the jury is out on that asset, that it is a good quality asset, and that is something which is very, very important for IRFC.

Right, sir. One last thing, as you mentioned, that 40% asset will be majorly A-rated.

Just want to understand, is it only A, double A, or triple A rated, or we have some benchmark that we will cater?

let us not go into those details. The overall thing, as an investor, you can know that we are going for A-rated.

Board has its own powers. They look at every asset in a different manner.

Finally everything is sanctioned by the board, and board of IRFC is very, very particular about ensuring that the asset quality should be very, very good.

Congratulations, sir. Thank you.

Thank you.

It's a competitive bid. Every company gives their bid, and we also gave our bid, which was the best suited to us.

In the market, you do not know that which company will give what rate. It is just a healthy competition, nothing else.

To add to my Director Finance, banks today with deep cutting repo rates for few of the assets where they don't have exposure, at times one of the banks gets very aggressive in quoting. That's fair enough.

That is why we are very open to talk about it. It's not that every bid, despite having this strength of low overhead cost and low cost of borrowing.

It's not that every bid we are winning. That's very good about it.

Banks mainly, and not every bank. there are more than 10 banks are participating.

One of the banks at one time they become very aggressive for one of the assets and they are winning it. Yes, our strike rate is more than 60% in whatever bids we have participated.

One request, sir, if you could just, earlier we used to share investor presentation. If you could just share the same thing and also give us a sense of how your liability mix is and some of the questions that the earlier participants also ask, like cost of borrowing, some of the, what do you say, your liability mix and so on.

It would be very helpful, sir. Noted, Thank you, sir, and wish you all the best.

Thank you.

Good morning. My question is that there has been a dip in NIM and a substantial increase in the lease income.

Any particular reason for that?

Did you find dip in NIM visibly last quarter or general...

Quarter to quarter.

No, you understand this. This disbursement of a larger amount took place right at the fag end of Q3.

If you compare with last year NIM of Q3, that was 1.4, and we have landed at 1.51. Just here and there in a quarter-to-quarter, you might have the right comparison, but going forward, last year in total FY, we clocked around 1.4, but this year we'll be clocking more than 1.5.

That dip is mainly because of the fact that disbursement took place only in the fag end of Q3.

I get it. How about the quantum jump in the lease income, quarter to quarter again?

Quantum jump in lease income?

Yeah. There is a jump in the lease income.

Yes, here our accountant, he'll be talking more. Yeah.

Good morning.

Morning.

Basically the lease income operates based on the lease agreement what we enter with the Ministry of Railways. In last year we didn't execute any lease agreement with the Ministry of Railways.

It got deferred. In current year we are going to execute the lease agreement what was due last year as well as in the current year.

The impact of those lease income will accrue in the future periods. That's why there is a minor dip in the lease income in the current, as compared to the previous period.

Got it. Is there any plans for any buyback?

Looking at the share price dipping, is the company planning to buy back to shore up the prices?

We are the board of the company, we don't decide for buyback or selling of shares. It is the domain of Department of Ministry of Finance, DIPAM.

They are the real owners, sitting on 86% shares. If they take a call, they'll be telling the market about that.

Right.

I get it. Thank you so much.

Thank you, Manoj. We had a good outing in quarter three, and we believe that going forward also the stellar show in terms of the numbers will continue, and we are sitting in a pretty good condition now, having a good pipeline with us.

Yield also is looking up. Going forward, the diversification plans that we have launched in the beginning of the FY, now is the time to consolidate on that.

Going forward, we believe that all the kind of guidancees that we have given, we'll continue to achieve those things. Thank you.