Discussion Topic: Evaluating the Future of IRFC Amid Stagnant Profits and Limited Growth Prospects

Hello IRFC Community,

I’ve been closely following IRFC’s quarterly results, and it seems that profits have been stagnant over the last two years. Additionally, during the last earnings call, management mentioned that the government has already allocated most of the Railway capex in the budget for the next 2-3 years, reducing the need for extra-budgetary resources. This could potentially limit IRFC’s growth in funding railway projects.

Given this context, I’m concerned that there might not be much room for EPS growth in the near future. The market price seems to reflect an optimistic outlook, but with the current lack of growth catalysts, I’m wondering if the stock might be overvalued at this point.

My Questions to the Community:

1. Stagnant Profits and EPS: What are your thoughts on the stagnation in IRFC’s profits and EPS over the last couple of years? Do you see any potential triggers that could drive growth in the near future, or do you agree that the stock might be overvalued given the current outlook?

2. Impact of Limited Government Capex: With the government already allocating most of the Railway capex in the budget, reducing the need for IRFC’s extra-budgetary funding, how do you think this will impact IRFC’s business model and profitability in the next few years?

3. Long-Term Viability: Despite the current challenges, do you believe IRFC has a viable long-term strategy to adapt and grow, or should investors be cautious given the potential limitations in funding and growth?

Looking forward to hearing your insights and opinions on whether IRFC can navigate these challenges or if the current valuation might be too high given the stagnation in growth.

Thank you!

Two more tenders are out:
This one is around 320 KM Dholpur – Bina

This one is around 350 KM Duvvada-Vijaywada

Discussion Topic: Evaluating DCB Bank’s Long-Term Lending Strategy

Hello DCB Community,

I recently had an insightful conversation with a DCB Bank manager about the bank’s approach to lending, particularly to MSME clients. He mentioned that DCB Bank is not very aggressive in its lending practices. Instead, they focus on building strong personal relationships with their MSME clients, offering loans that are mostly collateralized, with less stringent income verification compared to larger banks. The paperwork is kept relatively easy, and the bank isn’t overly concerned about CASA (Current Account Savings Account) ratios or deposits, as they offer higher interest rates than many competitors.

My Questions to the Community:

1. Reliance on Personal Relationships and Collateral: The bank’s strategy seems to rely heavily on personal relationships with clients and the value of collateral rather than strict income criteria. Do you think this approach is sustainable and prudent for long-term success? Is it really as safe as it seems to base lending decisions primarily on collateral value?

2. Ease of Selling Collateral: The manager mentioned that since the lending is mostly collateralized, they are less worried about risks. However, how easy and practical is it to sell collateral in case of defaults, especially in challenging economic conditions or with specialized assets like machinery? Does relying on collateral provide enough protection in the long run?

3. Long-Term Moats for DCB Bank: Beyond this lending approach, what do you see as DCB Bank’s long-term competitive advantages (moats)? How can the bank sustain its growth and differentiate itself from larger players and fintech companies in the evolving financial landscape?

Looking forward to your insights and opinions on whether this strategy can help DCB Bank thrive in the long term or if there are potential risks that need to be addressed.

Thank you!

If you have views regarding anything that pertains to the business or the stock, you can share them for the benefit of all who are invested or interested in the company, not necessarily data-backed, even quantitative will suffice, but do not make comments like these, particularly when someone is experienced and has been an active member and who has introduced many businesses to the forum.

Members are optimistic about the businesses they are invested in, even to the point of being biased, that is it. Sometimes they might have certain exclusive views, information, which are not available in the public domain, but that doesn’t make them anything else than what they are, investors. He started the thread, he follows the business, he has his views and presented them. If you have a different view, do share, it helps.

It seems, you are new to the forum, so saying this.

Result is below expectations and management explained the reason. This will unfold fully by Q4 when their capacity is built fully.