The Hindu Business Line : IFCI continues upward march

“There was a lot of buying interest shown by FIIs in this stock today, in fact it attracted attention from every quarters be it institutional or retail investors, everyone wants to buy it,” said Mr Jignesh Desai, Head of Institutional Sales, SBI Cap Securities.

The stock was the second most actively traded security on the NSE today.

Market players identified the impending stake acquisition by a strategic investor as a factor in the scrip’s strong showing.

“There are a number of private equity firms and other buyers who are interested in buying the 26 per cent stake IFCI is offering and also that the company has undergone significant improvement due to restructuring,” said Ms Sarika Lohra, banking analyst, Angel Broking Ltd.

Performance

According to analysts, the company’s financial performance had been poor until last two quarters when there was a positive turn mainly owing to sale of its stake in the NSE and ICRA. Earlier government had chipped in grants to revive the institution.

Also the Government had announced a special package for IFCI to meet its heavy liabilities.

“After they sold their stake in NSE, ICRA etc there was a lot of value unlocking and so they recovered that money, which was a booster for their performance,” said Mr Desai.

According to an analyst, the fact that even if some of loans that IFCI holds in its books have gone bad the underlying collaterals are valuable.

Certain changes in the terms of repayment of non-performing loans and recovery measures have also boosted its performance, she added.

“The company had been performing poorly over so many years and since the last three years they had not been able to earn money in their core business, but now that their performance has improved and once a strategic investor comes in there are bound to be structural changes in their functioning which will improve its performance considerably and make it a profitable investment opportunity,” said Mr Darpin Shah, banking, finance and insurance analyst, Dolat Capital Market Pvt Ltd.

IFCI had announced some time ago that it will offer at least 26 per cent stake in it to a strategic investor through fresh issue of shares.

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