>IFCI LIMITED (ANAND RATHI)

Investment Rationale

■ IFCI is one of the oldest NBFC involved in activities like Project finance, financial services, Non project specific assistance nodal agency for SDF and corporate advisory services.

■ Along with its above core business it has a huge amount of investments in listed and unlisted stocks which can all get valued close to Rs. 2500cr [like NSE, Hindalco and Tata DVRs with Rs. 250cr each] and also a huge land bank of 7.5lac sq feet in prime locality of Mumbai and Delhi.

■ It has a healthy capital adequacy ratio of 20%.

■ They have cleaned their entire NPA, now the book is carrying standard loans of Rs. 7000 cr backed by equal amount of borrowings.

■ Going further the government proposal of giving fresh banking licenses to FIs / NBFC’s could be positive news for the company. IFCI is looking to enter commercial banking.

■ The main trigger for the stock could be the process of inducting a strategic investors, which would invest fresh funds and unlock the value of the company. This will add on to the premium to the current stock price.

■ Due to improved outlook for financial services and increased value of investments & Property. The strategic investor should assign a higher value to IFCI [ w are expecting Rs 75-80 per share], which could lead to rise in stock prices. Investors can BUY at current price with limited downward risk and reasonable returns in medium term.

Risk and Concerns

The delay in roping in the strategic investor may continue to cause sluggishness in stock, but this can only delay the value unlocking.

To read the full report: IFCI