Shares of the Indian Railway Finance Corporation (IRFC) have taken a significant dive since reaching an all-time high. After peaking at ₹229 on the NSE in June 2024, the stock has plummeted to around ₹124, marking a staggering 46% drop. However, recent developments indicate a potential turnaround, especially after the government approved four major railway infrastructure projects valued at ₹18,658 crore. This surge in activity has sparked interest among investors, positioning IRFC as a compelling option for those seeking long-term gains.

Why Invest in IRFC Shares?

Investors are starting to take a closer look at IRFC shares, particularly because of their connection to the burgeoning railway sector. Gaurav Goel, the Founder and Director of Fynocrat Technologies, emphasized that the past year saw a rush of investments in PSU stocks, including those tied to railways. He noted, “Many stocks reached inflated valuations that didn’t reflect their growth potential, leading to significant corrections. IRFC shares are included in this category. Savvy investors often look for fundamentally solid stocks that are currently undervalued.”

Government Support and Market Dynamics

Long-term investors are encouraged to consider the IRFC shares, according to Avinash Gorakshkar, Head of Research at Profitmart Securities. He explained, “IRFC is crucial for providing credit to railway infrastructure companies. With the recent approval of substantial projects, IRFC stands to gain immensely as these companies will seek financing from them. Investing in IRFC at this juncture appears to be an attractive proposition. For those looking to build wealth over time, these shares could be a strong addition to their portfolios.”

Prashanth Tapse, Senior Vice President of Research at Mehta Equities, also weighed in on the stock’s potential. He stated, “For conservative investors, IRFC represents an excellent choice due to its dedicated financing role within Indian Railways. With robust government backing and a low-risk business model, coupled with promising dividend yields, IRFC is positioned well for long-term growth.”

Technical Analysis and Future Projections

On the technical front, Anshul Jain, Head of Research at Lakshmishree Investment and Securities, highlighted signs of recovery for railway PSU stocks following their earlier declines. He noted, “IRFC shares have experienced a 46% correction over the past 33 weeks but are now showing promising indicators of a rebound. The stock is forming a higher low on the weekly chart, supported by a bullish Marubozu candle, suggesting strong buying interest. A bounce back towards ₹140 seems probable.”

Looking ahead, Jain predicted, “If IRFC can break above ₹140 on a closing basis, we could see the stock reach between ₹160 and ₹165 within the next nine to twelve months.”

In summary, the combination of government support, strategic positioning within the railway financing sector, and positive technical indicators make IRFC shares an intriguing option for investors looking to capitalize on the ongoing infrastructure developments.