Fitch Ratings has affirmed Indian Railway Finance Corporation (IRFC) long-term foreign- and local- currency issuer default ratings (IDRs) at 'BBB-'. The outlook is stable.

IRFC's ratings are linked to the ratings of India (BBB-/Stable) due to IRFC's legal and funding ties with the Ministry of Railways (MoR). Fitch has classified IRFC as a dependent public sector entity. The company's strategy is dictated by the government of India, which tightly monitors and controls it. IRFC plays an important strategic role in India's railway sector because it is the sole financing arm of the MoR.

The ratings derive strength from the MoR's ongoing support, as evidenced by regular equity injections into IRFC since its formation. IRFC's debt/equity ratio has been largely inside the 10x limit during the past three years. Fitch expects further capital injections from the MoR if the ratio exceeds the limit. The MoR injected Rs 6 billion and Rs 6.3 billion into IRFC in the financial year ending March 2013 (FY13) and FY14, respectively.