Close price : 55.80 ( 01-OCT-2009)
Recommendation : BUY ( in small lots )
| Market Cap | 4,113.44 | | | * EPS (TTM) | 8.22 | | | * P/E | 6.78 | | | * P/C | 6.69 |
| * Book Value | 37.99 | | | * Price/Book | 1.47 | | | Div(%) | 8.00 | | | Div Yield(%) | 1.43 |
| Market Lot | 1.00 | | | Face Value | 10.00 | | | Industry P/E | 14.35 |
One can BUY the stock IFCI in the market down time in coming days for long term investment.
The P/E rate is less compared to Industry P/E which is a positive for this stock. It have the book value of Rs.38/-. So one can buy the stock in small lots below 50 level for long term gains.
Diversified Business Operations -
IFCI with its subsidiaries and associate companies has a presence across business segments such as Project Finance, Infrastructure Advisory, Merchant banking, Brokerage, Investment Advisory services, Venture Capital, Insurance broking, Asset reconstruction and securitization. Investing in IFCI brings in the strategic advantage of acquiring these operative licenses from day one thus preponing cash-flows in strategic businesses in a booming economy by almost 12-18 months and with minimal incremental infrastructure investments.
Recovery process to accelerate
With a rebound in economic activity, we expect NPA recoveries to accelerate. We have revised our estimate on chances of recovery to 40%, from earlier 30% of provided NPA. Gross NPAs have scaled down 5% to Rs 5,152 cr from year ago. Net NPAs as of March 09 were Rs 463 cr. However, excluding one power project which is likely to be upgraded, net NPAs stand just at Rs 77 cr.
Adequately Capitalized
IFCI has a very comfortable capital adequacy ratio of 19.7%.It can easily grow at an accelerated rate without raising fresh capital. It continues its plan to rope in a strategic partner which will not only bring in capital to strengthen the balance sheet, but also bring in the required expertise to expand its reach in the financial services gamut.
Fresh sanctions in full swing
Total approvals increased to Rs 40 bn as against Rs 25 bn in previous year, similarly total disbursement has improved to Rs 33 bn as against Rs 23 bn last year.
Dividend declared after 10 years
After a gap of ten years, IFCI has declared dividend of 8% for FY09. It has declared dividend after fulfilling the necessary precondition of making profit for last three years.
Valuations
Descriptions INR Mn
Total Assets excluding deferred tax asset as on FY09 :116,882
PAT of Q1FY10 : 1,008
Gain/(Loss) accrued on quoted Investments : 5,529
NSE profit accrued (5.44% stake) : 5,770
Recovery of NPA (assuming 40% recovery rate) : 18,756
:147,945
Total Liabilities as on FY09 : 96,738
Preference Shares : 3,458
Net Assets : 47,749
P/BV Multiple : 1.2
Fair Value : 57,299
Number of Equity Shares (Mln) : 738
Banking License would provide further upside
In a bid to make our financial system more sound, regulator might decide to issue banking license to NBFC. Once it happens, IFCI would be in all scenario most probable beneficiary. Once converted in to a bank, cost of funds would significantly come down and would cater to capital need to expand its loan book.
Other non-fund based activities
In addition to normal lending activity, it has started focusing on Private equity participation, project development and other advisoryservice. It plans to offer products, which banks are restricted like promoter’s funding, take-out finance and debt swapping.
It has invested Rs 382 cr in its various subsidiaries including IFCI Financial services Ltd, IFCI Venture Capital Funds, IFCI Infrastructure development Ltd and IFCI Factors Ltd.
Disclaimer:
(Please take your own decision before investing or trading in stocks or take advise from your financial adviser. Trading in stock market is very risky. Please analyze yourself what is your risk profile. This blog is not an advisory service to buy or sell. The contents of “this blog” are only for educational purposes. )Thank you,
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