Ladies and gentlemen, good day and welcome to the Indian Railway Finance Corporation Limited Q4 and FY 2026 earnings call hosted by PhillipCapital India Private Limited. As a reminder, all participant lines will be on the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, zero on your touchstone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Manish Agarwalla from PhillipCapital India Private Limited. Please go ahead.
Good morning and welcome to Q4 and full year FY 2026 earnings call of Indian Railway Finance Corporation. We have with us, Sri Manoj Kumar Dubey, Chairman and MD CEO, accompanied by Sri Randhir Sahay, Director of Finance and CFO, and other senior member from the team. I request Mr. Dubey to share his thoughts on the quarter and financial year gone by and provide us with an outlook going forward. Over to you, sir.
Good morning, Manish Agarwalla, and good morning everyone who is joining the con call. Good morning from the whole team of IRFC. It's a very auspicious and happy day for us. We started on our new journey of diversification, which we typically call IRFC 2.0, when we started FY 2026 last year on fourth April. The highlights of starting on those days was one, that we had been conferred Navratna status and at the same time we had promised to the investors and our shareholders that we are embarking on a new journey of diversification, which is going to take company on a different trajectory of growth. Every quarter, we promise something, and I'm very happy that today, when we close our financial year and we are out with the official numbers.
Number one, for any management, the first thing is to be tested on their statement that they have made. I'm very happy to share that we promised with a guidance that we'll be sanctioning more than INR 60,000 crore of assets, and we'll be dispersing nearly INR 30,000 crore over the year. It was a difficult task for the fact that there was no pipeline for this company. As you know, for the railway, whatever was assigned, it was disbursed in the same year. When we started FY 2026, there was zero pipeline. The challenge to the team of IRFC was to create a pipeline as well as disburse it.
Typically, against what we gave the guidance of INR 60,000 crore, we crossed the mark or we reached the mark of nearly INR 74,000 crore for the year, in terms of sanction of assets. Against the guidance of INR 30,000 crore for disbursement, we could do around INR 35,000 crore. That is heartening that as a management, what we spoke, what we promised, what we gave as a guidance, we could surpass that. Morning shows the days, as you say, as we all say. Now, when we are embarking on next FY, of this new journey 2.0, we are obviously a little relaxed in the manner that we are confident that what we propose to do for the growth of the company, we are more confident to it.
We are not relaxed on the fact that growth will come on its own. We have to work for that. Numbers, as you see, overall numbers for the year, financial year, all the parameters have shown its highest in the history of the company. Be it the revenue, it is highest for the company in all the years together. PAT, again, it is highest. We have crossed the magic figure of INR 7,000 crore this year. Our net worth is consistently growing from INR 52,000 odd crore, now it is INR 56,000 odd crore plus. The biggest indicator is the net interest margin, and we feel that we are at a sweet spot for the fact that all these years we worked on a flat NIM because the margin from Indian Railways was fixed.
This is the first year for IRFC when it tested the success of getting higher margins despite changing the best quality asset through RFPs and competition. Despite the fact that we competed and won the bids, my margins are quite higher than what we used to get from the railways, and that is having a very positive impact on my NIM. Going forward, to summarize all the indicators, that is, top line, bottom line, net worth, my net interest margin, my EPS, we have given a target to ourselves that in the FY 2027 and going forward, we should grow in double-digit. In fact, that was a target that we gave to us for the profit last year and end of the year we ended up around 8%.
Quarter 4 was a little flat was due to the fact that there were some provisions to be made because for the railway asset there were no system of provisioning because it was sovereign asset. Where, when we are funding to even CPSEs or the state governments in the ecosystem of all government approach, still, as per RBI guidelines, provisions are to be made. There are more expenditure in CSR in the last quarter. It happens typically. Taken all together, Q4 PAT is flat, but revenue has shown the green shoots and very high uptrend of 9%, which is matching to our aspirations going forward that our top line also in FY 2027 should grow handsomely, maybe touching more than 10% also, and this will start showing right from the Q1.
On these notes, we are not putting in numbers as a guidance for FY 2027. What we have decided that whatever we achieved last year, which was around INR 75,000 crore of sanction of assets. And nearly INR 35,000 crore of disbursement. That should be the benchmark going ahead. Management is very confident that going ahead there has to be things going positive on these lines. We'll be surpassing these numbers in this current year also. Quarter after quarter, it will unfold how the story is going to pick up the strength. The last comment is on asset under management, which is the key indicator for the kind of business, sustained business our company is doing.
You see, for the last 3 years, the asset under management for the company was flattest, hovering around INR 4.6 lakh crore. This year, as you see on net basis, when I talk net basis, then it takes care of all the repayment that came from the Indian Railways towards the older loans. On net basis, on the end of the year, the asset under management has grown to INR 4.85 lakh crore. Going forward, we expect that in the year, in the FY 2027, the magic figure of INR 5 lakh crore for AUM, we should touch some time in H1, maybe, early to that. Let us see. Overall, despite the geopolitical situation prevailing all over the world, we feel that the CapEx story of India is fully intact.
The dreams of Honorable Prime Minister for Viksit Bharat is right in the place. Complementing that next 5 to 10 years perspective for Indian Railway Finance Corporation, when we are targeting whole of government approach for CapEx financing, we are on the right track and we'll be having consistent growth. Thank you.
Members, should we start the question and answer? Okay.
Yeah, I think just go ahead.
Thank you. Thank you very much. The first question is from the line of Nilesh Jitani from BOI Mutual Funds. Please go ahead.
Hi, good morning, team. once again, congratulations on.
Sorry to interrupt, sir. Your voice is very low. Can you get the headset, handset near?
Yeah. Hi, good morning. Is my line better now?
Yes. Yes, it's much better.
Yes, yes.
Thank you. You can go ahead.
Okay. Hi. First of all, congratulations to the team, IRFC for a great set of numbers. My first question was on the sanction numbers at the end of FY 2026. What is that? Going ahead, what does the pipelines look like for the sanction numbers? Second question, follow-up to that is on the current sanction numbers, what can be the expected disbursements in your prima facie expectations for FY 2027?
Thank you, Nilesh. As the number goes, we started with 0 pipeline or say a very small pipeline of INR 3,500 crore when we did at least only 1 deal before the FY started. This year we sanctioned nearly INR 74,000 crore of assets in FY 2026. Our disbursement stands at nearly INR 35,000 crore. It has few marquee deals of refinances. 1, very important deal that we did with the Dedicated Freight Rail Corridor, that is our sibling company, where we refinanced a loan of World Bank of nearly INR 10,000 crore. Second marquee deal was with the joint venture project promoted by our Maharatna siblings, NTPC, IOCL and Coal India. That is Hindustan Urvarak & Rasayan Limited that we did our Q4. That was more than INR 12,000 crore refinancing deal that we did.
Apart from that, we did a few deals in Genco side. NTPC also we did with their subsidiaries directly on the NTPC balance sheet also. Taking all together, we crossed the mark of INR 35,000 crore disbursement. Going ahead this year, as I said in my opening remarks, as we have tested the success of diversification, apart from the railway business, if any, which is coming from them, we expect that in the FY 2027, our sanctions will be more than INR 75,000 crore. Now, how high it goes, we'll review every quarter, but I'm sure that, we are sure that, we'll be crossing that mark of INR 75,000 crore that we did in our very first year of diversification.
Similarly, on disbursement front, last year was a tight year for the fact that there was no pipeline. Now that we have a pipeline and we are expecting good business starting from Q1, we believe that the mark of INR 35,000 will be again breached. The important and interesting thing that I keep on telling every quarter is that for this company, which was doing business only with single client, Indian Railways, where margins were fixed. Those margins used to be INR 0.35 for projects and INR 0.40 for rolling stocks. When we are competing and doing business for the very, very attractive and good quality assets in government system also, we are able to garner a margin of more than 100 basis points.
What will happen that this INR 35,000 crore odd that we are doing business, it is akin to nearly INR 1 lakh crore that we used to do with Indian Railways in terms of yield. That is a sweet spot for IRFC. Going forward, as you see all of our financial parlays, everybody's NIM is under pressure. While IRFC because of the fact that the NIM was base was very low, quarter after quarter we'll be showing better NIM. That is the answer to your question, Nilesh. I hope I've clarified.
Got it, sir. That was very helpful. Second question was on this incremental NIM. You, while you rightly pointed out that the NIMs are way higher in the new business, what we are doing ex of the erstwhile railway specific business. Just wanted to understand over here, today if we are giving ex rate to the prospective or the potential borrower, typically what rates are we undercutting? Say, what yield was being offered by someone else, and what are we offering on the yields per se?
You see, in the market we have all kind of assets. There are risky assets where you can charge more. There are pristine assets as typically you say A class asset. There's When the assets are rated. Obviously, when it is rated, when it is promoted by Maharatna with very strong balance sheet, if an asset is renewable asset. Every class of assets is attracting a different kind of competition. We are always looking for the best class assets because, you know, we are one of the rare companies, not only in India but in the world, for the size of a balance sheet of more than INR 5 lakh crores, we are zero NPA company. Typically every forum I say that zero NPA is not a status symbol for this company, it is a business proposition. Why it is a business proposition?
Because of zero NPA I'm attracting cheaper borrowing from the market than my peers, which helps me in offering better rates. For the fact that it attracts my investors also because everybody likes to have a company in their kitty who are having the best class assets. We are not participating into high risk, high reward assets. We are participating into assets which are highly rated A class, A plus, double A, triple A also. That is what I'm mentioning to you. Typically here the margins are in tune of 100 basis points to 120 basis points, no more than that. In this bracket we are competing well. We are competing not only with NBFCs, we are competing with all the banks also.
Typically, for these class of assets nowadays banks are also coming for, as a long tenure of 10 years. Yes, it's a crowded place. The happy thing is that, despite being the crowded place for the best class assets, IRFC is winning more than 60% of the bids. Going forward our margins, we are looking for the margin in tune of 100 bps to 120 bps typically on an average.
Got it, sir. One last question from my side. The assumption is very rightly mentioned that 100 to 150 basis points of differential margins are there. On the other, the erstwhile business of Indian Railways we got certain benefits of tax et cetera also. Not going, you know, into detail about how the ROA tree would look like for the new business and the old business, but adjusting for this tax benefits and the lower provisioning requirement et cetera from the Indian Railways. At ROA level, say today at company level what I can see from presentation, we are at approximately 1.39%, where I believe INR 35,000 is from the new business and the balance, INR 430 crore, INR 450 crore would be from the erstwhile business.
There's a broad difference in the ROA profile of the new lending versus the erstwhile lending. Any differential if you can help me on the ROA, that would be very helpful.
I'll tell you the general thing. You rightly said so. Today, say my total AUM is INR 4.85 lakh crore, and this the new business is typically INR 35,000 crore. The % comes out to be nearly 5%. What target we have given to ourselves, in the last con call also we've talked about this, that this company feels that going forward our asset quality should be 60%. 60% should typically be from the Indian Railways, which is cost plus model at fixed kind of margins, and 40% we are looking forward to garnering from the diversified field. When you take two together, you will put the numbers. I mean at 5% we stand at 1.39. This has come out from 1.34%.
Going forward, as I said, you'll be seeing a consistent improvement in ROA. Where would it land? That is a calculation that you can do. It's very simple to do, based on our 5% of diversified portfolio. If you add 30% you can re-reach to a conclusion what is going to be the ROA going forward, say in next 2 to 3 years.
Okay. Okay. Any sense on what kind of ROA? I understand, because this mix would include a lot of calculation which on the tax benefit one is getting and provision requirement are slightly lower.
Nilesh, on tax, you know, we have enough depreciation kind of thing in our kitty. So this company will remain tax-free with the kind of already accumulated deposits that we have for next 5-7 years. Rest be assured, company will be getting more and more leasing business for rolling stocks in the future. Not only within Indian Railways, we are going to do it for metros also, for rapid rail also. So we are very comfortable that for quite a longer period right now, it is quite visible that for this company, PBT and PAT will be same, and we'll be getting the benefit of the tax that we're getting out of depreciation. So there is no concern right now for next 5-7 years on that account.
If I just do the rough calculation where if NIMs are 100 basis points higher, they're 2.25-2.5 is the NIM, and typically operating costs are 0.25. PPOP runs to 2.25 where provisioning, say, assuming standard asset is 0.4 and under construction is 1%. Again, provisioning number of 0.5. Since no tax required for next 5, 4 years, ROA would be 2% for the new business. It is right to assume?
I'm happy to hear from you.
Okay.
That this is how you will help me out. Your numbers I'm putting on my paper, and I'll be validating it and coming back to you in next quarter.
Okay.
Precisely this is the benefit that management gets by interaction with you guys in the conference call. Your numbers must be perfectly fine because you are good at it, so I'm not doubting your numbers. I think you are doing the right calculations. This is not coming from our side because it is your job to do the calculation. I can give you the indicators, and you have taken all the indicators in the right manner. That I can assure you.
Okay, sir. Got it. Once again, thank you so much for patiently replying to all queries.
Thanks, Nilesh. Thank you.
Thank you. The next question is from the line of Mohit Jain from Tara Capital Partners. Please go ahead.
Hello? Hello, can you hear me, sir?
Yes, Mohit. Please go ahead.
Yeah, hi. Good morning, sir. Sir, couple of things. First on this, the sanctions, disbursement that we made to the, this, fertilizer plant, sir. Ideally, sir, our MOA is allowing us to disburse it to the Railways and any other companies which are in the same ecosystem. This disbursement into fertilizer sector, how is it correlated to our core sector, sir? I'm trying to understand this.
Yes. Mohit, so you must be knowing or if you're not knowing, then let me reiterate. Our mandate says that anything having a backward or forward linkage with the railways, we can fund.
Meaning thereby any entity which is bringing in business to Indian Railways.
We can fund.
You know, typically these high production fertilizer companies, they're all linked to the railways. There are railway siding there, and all evacuation of fertilizers are taking place through the railways, A, B, the raw material for that fertilizer comes like ammonium nitrate. These are also hauled by the railway itself. They all are having railway sidings within their campus and all evacuation of the finished good and the raw material going to their factory is through the railways.
They are coming under the ambit of backward and forward linkages with the railways, and that is how we are funding them.
Understood, sir. Understood.
That is Mohit the sweet spot for IRFC because the moment you talk about backward or forward linkages, there is hardly anything left in infrastructure which is not having a backward or forward linkages with the railways.
Got it. Basically any entity which is using railway in any sense or the other.
Absolutely
Becomes sort of a target, customer.
Correct.
Target link.
Correct.
Got it.
Correct. Correct.
Got it. Got it.
Absolutely. That is how we did funding to two of the mega fertilizers companies of the country. One which is already under production that you mentioned, HURL, which is promoted by our Maharatna giants like NTPC and IOCL.
The other one also we have funded in Talcher, which is under construction. That also is promoted by another Maharatna giant like GAIL and Coal India and Rashtriya Chemicals and Fertilizers, which is Navratna. Yes, any evacuation of fertilizer will take place by the railways and any raw material going to them is also through the railways. They are our very valued customers and we are very happy to align with them and fund them at a very attractive rates.
All right. Got it. Sir, the second thing is regarding that mix we are targeting have a 60-40 mix going forward in 3, 4 years, where 60% is going to be railway and 40% is going to be non-railway, which is at 5% right now. Sir, in that situation, even if I'm presuming a 5% AUM growth, we will be needing almost like INR 1 lakh crore of disbursement every year, to, you know, so that we have a mix of 60-40 by let's say 3, 4 years. How do we look at this number, sir? Is it possible to have such a high disbursement in the non-railway sector?
No, no, no. You are missing a point. Every year there will be repayment of INR 20,000+ crore from the Indian Railways. When I am saying that I am maintaining my AUM or growing it.
Yes, INR 40,000 crore is the base that I've talked about. Let us see how it grows.
Company aspires to have a kind of 30% - 40% mix from the non-railway business. You see, morning, sorry, in the first year, wherever we participated without the pipeline, we were able to disburse INR 35,000 crore.
With the kind of rates that we are offering and because of our low borrowing cost, because of our zero NPA status, as well as because of very low overhead costs, we are able to fund at a very attractive rate to high quality assets. Today I'm not required to market myself. The business is coming to me. We are encouraging good quality assets to go for RFP, and we are participating to RFP. The sweet spot is that I'm giving you a typical example. There is already a RFP in public domain. NTPC and U.P. government is coming out for as big a tender as INR 28,000 crores-INR 29,000 crores.
We are also participating. It will be a very cutthroat competition because it's a very good asset. Potential for IRFC to grab nearly INR 16,000 crore because that is our limit. We do not have any exposure to many entities because we earlier did only with Indian Railways. For the fact that our net worth is quite high, it is as high as INR 56,000 crore. As per RBI guidelines, we can pick up around INR 16,000, INR 17,000 crore of asset in one go. If it is a very good asset and we feel like. These kind of businesses are on the platter. Going forward, it's not that we said that we'll be 40% in three years' time, but yes, we aspire to.
Since we did very good business in the very first year, we feel that the kind of CapEx requirement is there in the government parlays all over the country going forward. You know, NIP, you must have heard about National Infrastructure Pipeline. Nearly INR 20 lakh crore is a projection of more than that for every year to be consumed by the government entities and the private entities. Business is there on the platter. We feel that we will get a good share and yes, going forward in three years or four years or five years, obviously, when we are doing more and more of diversified business, then the ratio will be somewhere nearly 40 to 60. This is what we are trying to tell the market.
Thank you. The repayment rate is INR 10,000 crore per year or INR 20,000 crore per year from the existing Railway contract?
No, no. It is, it varies every year, but repayment going forward will be around INR 20,000 crore now.
Okay, INR 20,000 crore. Sir, in that case, how should we look at the AUM growth number? What should we expect as the AUM growth for next couple of years?
We have given us the target that let us cross INR 5 lakh crore marks in FY 2027 and maintain it steady. We are not putting any numbers on that. One thing we are assuring that once we cross INR 5 lakh crore mark, you won't find any dent in that. It will be growing. How much it will be growing, that is a different issue. The better thing is that we will be replacing the lower margin business of Indian Railways with the higher margin business of diversification. Even apple to apple, if I'm, say, replacing INR 30,000 crore from the old business and adding INR 30,000 crore from the new business, my NIM will be at least having 2 x more than what I used to get from the old business.
In that case, even if my AUM remains steady somewhere more than INR 5 lakh crore and I'm replacing low margin business by high margin business, my NIM will be growing, my PAT will be growing, my EPS will be growing. That is a clear message that we want to give to our investors.
Got it. Got it. Got it, sir. What is the NIM differential between the two businesses, just so we can confirm? Is it like 100 basis point between the new and the old one?
Yes. Yes. Yes. 1.4 used to be from the railways, but what we expect from the new business is nearly somewhere between 2.2 to 2.5. Average, as you see, what we have already delivered, we have delivered from average NIM of 1.42 to 1.50 for this FY, which is nearly 6% up. Next year, we want to see better margins because we will be getting benefit of what we have added in last year and what we'll add this year. We are giving us a target that my NIM for FY 2027 should grow minimum 10%.
The NIM in the sense like, from 1.5%, we should be expected to rise to like what, 1.6%, sir?
INR 1.65.
1.6.
INR 1.65.
INR 1.65.
Yeah. End of the year. End of the year.
Sir.
All my total assets. All my total assets.
Got it. Got it. Got it. Got it, sir. Sir, any guidance you would like to give for the AUM growth? I know you have said INR 5 lakh crores for AUM, but that is only at 3%. That's perhaps too conservative.
Mohit, I've given very tough guidance for you, which is very tough on my team. When I say that, we wish to grow our top line by double digit, we wish to grow our bottom line by double digit, we wish to grow our EPS by double digit, we wish to grow our NIM by double digit. I mean, you take all four together, you can see without growth in AUM, all these things are not possible.
Got it, sir. Got it. Sir, just to re-clarify one thing.
For my team, Mohit, just I want to add one thing. For my team, I always keep the target very simple. Once you put this number that you should grow every indicator by 10%, they know they have to do the calculation how much AUM should grow.
Got it. Got it, sir. Got it. Just one clarification on the previous participant's question. Sir, for the tax we are paying for next five, six years because of the cumulative depreciation we are having, it will be a tax free entity.
Yes.
Even for the non-railway business.
Yes. Yes. Yes. Yes. Till the time we are again getting lease financing. If we get again the lease financing of the rolling assets, accrual will start again. As of now, whatever we have in the kitty, that is sufficient for next five years.
Got it, sir. Got it. Okay. Thank you, sir.
Thank you. The next question is from the line of Sukrit D. Patil from Eyesight Fintrade Private Limited. Please go ahead.
Good morning to the team. Beyond the numbers, which you have given in very much detail, I just want to understand your perspective on how IRFC is preparing to capture future opportunities in railway infrastructure financing through addressing challenges such as the rising capital requirements, interest rate volatility and regulatory oversight. What strategic levers do you see most important for sustaining growth and supporting the company in the coming quarters? That's my first question. I'll ask the second question after this. Thank you.
You are asking very complex question, but let my business development head answer this question.
As CMD sir has told, you must see our previous progress. In last one and a half year, we have covered up a major milestone, and in last 1 year, we have sanctioned more than INR 74,000 crore. Going forward also, now earlier, we didn't have that the pipeline, but now, as our leader has told that we are confident and we are getting good inquiries from the entire ecosystem. Going forward, there would be a good capital investment in many of the sectors. Like, there would be a good investment in the power sector. There are many capacities are coming up in the thermal sector.
There would be a good amount of investment in the railway sector as well because we are also hearing in the news that there would be a new corridor that would require INR 2.5 lakh crore. There would be 7 high-speed rail corridors. They would require another INR 16 lakh crore kind of a investment. There would be a good amount of investment in coming years in renewable sector, in road sectors. There would be a good investment in the port sector. We are confident that there is a good amount of inquiries we are getting, and we are very hopeful that we will surpass this target at the end of FY 2027.
Having said that, regarding the regulatory oversight, because as of now, my net worth stand at INR 56,000 crores and we have just disbursed around INR 35,000 crore and sanctioned only INR 75,000 crores. Across various sectors, across various entities, my exposure norms is open. That gives me a good cushion that I may have a good exposure in coming years over the pristine asset. That would give me a good comfort. And pricing, we will be aligned with the market.
Yes, there is a hardening in the interest rate in the market, but ecosystem is taking that fact, and based on that, we also revise our lending rate based on the so that we will remain competitive and we should be getting the adequate margin to support our top line and bottom line. That is our strategy.
Thank you. Thank you. My final question, again, a forward-looking one. Looking ahead, how do you see IRFC's funding strategy evolving to meet the growing needs of railways? What measures are being taken to strengthen liquidity, diversify funding sources, and align capital structure with long-term expansion plan? Thank you.
Sukrit, yes, we remain the sole financing arm for Ministry of Railways and Indian Railways. Having said so, if there is any requirement of extra budgetary resources over and above what Indian Railways is getting from budgetary support, IRFC will be the first financing arm where they will come. We all know that the kind of expansion that Indian Railways is having, CapEx requirement, that is now hovering around INR 2.6 lakh crore for them for last 3 years. This is going to continue for 5-10 years. If there is any redistribution going forward from this FY or next FY in the budget for social sector and there is pressure not to meet all the requirements of Indian Railways or Ministry of Railways through GBS, we will obviously be there.
Second thing, as my ED BD mentioned to you know, if you recall, last time when Dedicated Freight Corridor Eastern and Western took place, the funding came from bilaterals and multilaterals. One was funded by JICA, the other was funded by World Bank. Similarly, high-speed rail corridor, the one that is already being commissioned, it is funded by JICA. There are 7 high-speed rail corridor that has been announced, and there is 1 dedicated rail corridor in the railway ecosystem from Dankuni to Surat that has been announced. Total requirement is huge. IRFC, prior to last FY, had never ventured out to any of the customers, even to the siblings in the railway ecosystem.
Now that we have already refinanced 1 of the World Bank loans of Dedicated Freight Corridor for more than INR 10,000 crore, going forward, the requirement for greenfield lines in high speed as well as DFC is our first business. We will be having our first right on them. Now, how it will be modeled, it is to be seen. Discussions are already on. Rest be assured that in the huge funding requirement that these 2 things in the railway ecosystem is going to take place, majority of funding has to come through IRFC, and we are gearing for that. We are planning for that. The moment things will go on, you'll be hearing how we are going to fund them. Second, yes, there are many SPVs are also coming, first mile, last mile. Earlier, we never used to fund them.
We have now started funding them also because their business model is dependent upon railways and it is vetted by Ministry of Railways, so we have got good comfort and cushion to take care of them also. Getting together, as you are rightly indicating to us, there is huge business opportunity in the railway ecosystem itself, but we are not limiting ourselves to them. The allied business coming from, as my ED BD mentioned that from the port.
Metro railways, you will be hearing very soon, maybe in the quarter 1 only, that we are going in a very big way to take them also on our wings, and we'll be one of the biggest players, in fact, the lone domestic player per se, apart from the multilaterals, who will be arranging funds for metro railways, which is a very, very big business entity in the country for the fact that almost every state is aspiring to have a metro railways. We are already in talk with one of the states for their funding. Overall, yes, in the total infrastructure scenario, having Indian Railways or railways per se at the center, there is huge business on the plateau and there is enough requirement for IRFC to ensure that liquidity remains there.
We are having very good standing in overseas market also. In fact, you may be aware that we did back-to-back two ECB loans of JPY 300 million worth of yen. We did successfully for JPY 400 million worth of yen. Already, we have opened one bid of JPY 1.1 billion worth of yen. That speaks volumes about the appetite as well as the preference of the foreign bankers to lend to India because they believe in the story that growth story that India is unfolding. In fact, we had a very extensive roadshows also. You may be aware if you're following us. A big team from our side went to Japan, a team went to Singapore, a team went to Taiwan and Hong Kong.
We have already sensitized all the foreign banks, typically more on yen side, that there is a huge requirement of consumption of ECB loans, maybe yen as a priority right now because right now dollar is not a very preferred currency. Going forward, we'll be looking for the bond market. Once the SOFR rate and things go a little sober, we'll be looking for that also. ECB contribution, we are looking forward to 30%-35% in our total kitty. We are focusing heavily on the infrastructure dependent long-term capital gain bonds that government have launched. Section 54EC earlier we used to be very casual about that, but now we are focusing on it. My market share has gone up to 28% last year. This year this will go up more.
It is coming at a very cheap rate of 5.25%. We were the first company last year who successfully did zero-coupon bond. It's a bullet payment after 10 years, and HNI showed confidence in IRFC, and it was mopped up with a very attractive rate. Going forward, we'll be mopping up that also. Yes, domestic bond rates right now is hardened. It is hardened for everybody, not only for us. At the same time, RTL still is available at cheaper rate, having a very moderate repo rate. Altogether, last year also we strive to have our total borrowing cost less than G-Sec rate, and that is a target this year also, and that is where the sweet spot lies for IRFC.
As I mentioned every time, that zero NPA status is helping us in attracting good lenders to us, and it is a business proposition. We believe that cherry-picking the good quality of assets will remain so, despite the fact that we are hovering out of Indian Railways and going to a whole of government approach. Zero NPA will remain there, and we feel that we continue to garner best of the borrowing rates in domestic as well as ECB markets. I think that comprehensive answer gives you the confidence that even an INR 1 lakh crore disbursement is required from our side consistently every year. We have done in the past, and we are competent to do in the future also. Thank you and best wishes. Thank you.
Thank you. The next question is from the line of Naman Kumar, an individual investor. Please go ahead.
Hello. Good afternoon, sir. Quick question with regard to the results. If you see the PAT, from Q3 to Q4, because IRFC is in a business where AUM grows, each quarter. If you see last quarter, December 25, the PAT was around INR 1,800 crore, while this quarter, Q4, it's INR 1,684 crore. A drop of around INR 100 crore. Plus, if you see include the other comprehensive income, it has declined from INR 1,800 crore to only INR 1,500 crore approx. In PAT there is a reduction of INR 100 crore and in OCI there is an impact of INR 200 crore. Can you please explain that, like what is causing that?
Naman, not much to worry. There are few issues which were new to us for the fact that pehle we never had the chance to do provisions because for lending to Indian Railways, it was all zero-risking. As per IBA norms, when we fund even to the CPSE or state government, the provision lies, it will made. There are other issues. Let my accounts head, Mr. Ajay answer your questions and your concerns.
Sure.
Yes. If you, if you just have a total revenue portion, there is a decline from in the other income also. We got a refund of income tax and there was some interest portion in that in the last quarter, Q3. Whereas in this quarter, there's no such item actually. On the other side you see there are some other expenses like CSR expense. We have made some additional provision in the current quarter. Regarding the OCI, I mean this is whatever is there in the mark to market. We have all our borrowings in the foreign currency which are on our balance sheet. Those all things are hedged actually. Whatever movement in the market of those currencies imply that we need to make a provision for that through OCI.
This is regarding the total comprehensive income.
Okay. Got it.
Uh-huh. Yeah, please. Please tell. Please tell, then I'll answer you again.
Yeah, sure. With OCI I believe for the exposure to Indian Railways, at least all the fair value on foreign currency borrowing or cost of hedging should be passed on to the Indian Railways. Is this?
Absolutely. You have right understanding.
Why is it coming in the financials? Will it be recovered in next quarter? Like, will we see a reversal in next quarter or how will it go? Because currently it seems like it's impacting the IRFC financials.
No, no. This is whatever is there for the ministries that is part of the ministries account actually. Whatever is there in OCI it is only our portion and there are some other items like for the staff benefit cost that would be coming and then we have made an investment with the IRCON. There is a movement of that investment also.
That is also coming in that OCI portion. Yeah.
Yeah. Majority of the portion is fair value change in foreign currency borrowing as per the Q4 results. That's where I'm trying to understand. Will it be passed to Indian Railways next quarter or maybe it is just because of exposure to non-railways financing which we have done.
No, no. This will be Mr. Naman, there are two kind of exposure. There we have two kind of exposure. One we do for the MOR business, and another, whatever lending we have done through for other than the conventional loan MOR business, that risk is in my balance sheet. For that, we have taken the full hedge, and these are the MTM valuation for that. Based on the Ind AS 109, we have accounted this on the basis of cash flows. Whenever these exchange will flow to me on actual basis, accordingly, these will get reversed. Other, this is a temporary passing. Ultimately, it will get reversed and will be reclassified through the P&L.
These are the temporary item for the exposure which I have on my own balance sheet. This will not be passed on to the MOR.
Okay. Got it.
I hope I have clarified this.
Got it. Yeah, yeah, this was helpful. Just one additional clarification with regard to exposure to non-railways, non-Ministry of Railways exposure to like a CPSE and all those things. If we have some foreign currency borrowing pertaining to loans given to them, in that case, what happens with the currency risk? Is it borne by us, IRFC, or is there a agreement with them that we pass on that cost as well to the CPSE?
Naman, typically for any non-railway business, we are quoting a rate, and if you are putting ECB mix into it, risk lies with us. As my EDBD told you, what we are doing as a very responsible and safe company that we are hedging it right away. Right. My hedging limits are quite conservative in terms of JPY as well as in terms of USD. Whatever we have raised right now on the balance for our P&L purpose, we have already hedged it with a very secure kind of ranges. Number one. Number two, we are also creating a kind of cost-plus model for metro railways. You'll be hearing it very soon, where risk will be passed on to them. Typically now, Naman, Indian Railway Finance Corporation have two models. One, you can have a cost-plus model also.
We are ready to do that because we have been doing that for long for Indian Railways. Other model is when we are participating in their open bid where they want somebody to quote with all the risk together, we are doing that also. Going forward, we'll have 2 kind of things. Yes, what we have decided right now that whatever ECB we are raising for non-railway assets where risk is lying on us, we should be immediately hedged fully for it. For your kind information, good thing is that what we raise ECB for non-railway consumption, the hedging, overall hedging cost taken together, the rates are coming somewhere below 6%, which is very attractive for us.
Okay. Got it. This was really helpful. My second question is, with respect to the exposure which we have, which we are now having other than Ministry of Railways, right? We may have some exposure to state government also. What kind of safeguard we are having in place so that we continue to be a zero NPA company in future? Because, you know, like there can be a risk of default. With Ministry of Railways, there is no risk of default. For others, there may be. What kind of safeguards or guardrails we are having?
Yes, you are very right. The guardrails and the kind of security that we are looking for out is first, in the CPSEs we are all clients. I can name you, and you can get the feeling who are our clients. Our clients are NTPC, all their subsidiaries. Our client is GAIL. Our client is Coal India Limited or its subsidiary. Our client is IOCL or its subsidiary. Meaning thereby in the Or we have done DFCCIL, which is a sibling. We have lended to one SPV, which is promoted by my siblings like CONCOR and RVNL. All these names, if you are following them, you'll be very well aware that they all are having very strong balance sheet, consistently profit-making giants in the CPSE parlance. It is a cherry-pick among the CPSEs also.
Similarly, when you are going to state governments, mainly into the power value chain, we are completely avoiding any kind of business with DISCOMs. That is not our business because we are not having any kind of experience or exposure in them. There are other siblings in the NBFC parlance who have got the experience exposure, and they will keep on doing it. We are limiting ourselves to Genco and Transcos. Amongst that also, we are cherry-picking those assets which are having very strong balance sheet, having cost-plus model, PPA arrangement in place. Given your flavor, we have not gone to any of the states which are high consuming states in southern part, with due regards to them. We have our right to choose the kind of states where we wish to do the business. We have done the business in MahaGenco.
They are the number one state government in terms of having the assets, they are doing very well. Their balance sheet is good. Their rating is good. Similarly, we have done to Chhattisgarh. We have done to Haryana. We are planning to do one where there is a 50/50 JV with NTPC and UP government. Again, you can see the kind of cherry-picking of quality in the states we are doing. Yes, I mean, there's a balance sheet and there's a risk, we have to see to it that what kind of assets we are picking up. These assets are having backing of state governments with a very strong way. Their tied-up things are there nowadays. In the value chain, the payment of Gencos and Transcos are almost assured.
That is why we are typically not going, touching anything in DISCOMs because their chemistry is all different. Answer to your question is we are taking all due care to ensure that even if we're in the government parlance, whatever assets we are cherry-picking is as safe as it could be. As I always said, you must have heard in the beginning also, zero NPA for IRFC is not in status, it is a business proposition. If I remain zero NPA, I will be garnering lower cost of borrowing that we are doing in domestic and international market. Rest we are sure that the management and the appraisal team is taking full care of it.
Yeah, okay. This is very helpful. Thank you. That is all from my side.
Thank you.
Jico bridge stuck. Okay. Thank you.
Thank you.
As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you, Manish. We are very happy to close on a happy note in terms of numbers. As you know, listed company has got a very onerous task to come back every quarter, get its report card with everybody. It's already mid of May. Q1, half of the Q1 has already gone. You know, very soon we'll be meeting again our investors. The good thing is that we have already embarked on a new journey of diversification, which is really giving us confidence now, having done well in the last FY. We believe that going forward, every quarter in FY 2027, we'll be coming out with very good numbers as the street expects us to do.
Let us see that the good work that is being done by team IRFC continues to enthrall and satisfy the investors who are very dear to us. Thank you.
Thank you, sir, and all the best. On behalf of PhillipCapital India Private Limited, that concludes the conference. Thank you for joining us, and you may now disconnect your lines.