Govt Grants Navratna Status To IRCTC And IRFC - What It Means For The Two PSUs?

The union government on Monday, March 3, upgraded two public sector undertakings (PSUs) - Indian Railway Catering and Tourism Corporation (IRCTC) and Indian Railway Finance Corporation (IRFC) - to the coveted status of Navratna Central Public Sector Enterprise (CPSE).

With this, IRCTC and IRFC have become the 25th and 26th Navratna companies.

IRCTC, the hospitality and travel arm of Indian Railways, provides catering, ticketing, and tourism services. It was established on September 27, 1999. For the fiscal year 2023-24, IRCTC reported an annual turnover of Rs 4,270.18 crore, a profit after tax (PAT) of Rs 1,111.26 crore, and a net worth of Rs 3,229.97 crore.

IRFC, incorporated on December 12, 1986, is the dedicated funding arm of Indian Railways. It raises resources from financial markets to finance the acquisition and creation of assets, which are then leased to Indian Railways. As of FY 2023-24, IRFC reported an annual turnover of Rs 26,644 crore, a PAT of Rs 6,412 crore, and a net worth of Rs 49,178 crore.

What It Means For The Two PSUs?

The elevation to Navratna status grants the two PSUs greater financial autonomy, allowing them to invest up to Rs 1,000 crore without seeking government approval, thereby fast-tracking their decision-making abilities.

To be eligible for Navratna status, a company must be a Miniratna Category I company, listed under Schedule 'A' of CPSEs, and must have consistently received an "excellent" or "very good" rating in the Memorandum of Understanding (MoU) system for at least three out of the last five years, achieving a composite score of 60 or above based on key performance indicators like net profit to net worth, manpower cost to cost of production, and earnings per share; essentially demonstrating strong financial performance and operational efficiency across various metrics.

IRCTC, IRFC Shares Decline

IRCTC’s shares on Monday, March 3, closed in the green at Rs 676.60 apiece on the NSE, up by 0.84 per cent. However, its shares have been on a sharp decline amid a broader market correction. From its 52-week high of Rs 1,138.90, it has come down by more than 40 per cent.

Meanwhile, IRFC’s shares have seen sharper correction from its 52-week peak, falling nearly 53 per cent. It closed at its 52-week low of Rs 108.04 per share on the NSE on Monday.