IFCI - another Poseidon?

#1
IFCI was on & off in the news in the recent past with take-overs of the loss-making financial institiution by PNB & then IDBI making the news columns. Nothing concrete emerging as yet on the merger front & with the Government admittedly holding back any prospects of financial aid to the merging party (remember PNB asked for 3000+ crores), is the horizon looking bleak for this scrip? The markets are now witnessing a well-defined slide (call it reaction if you will) but can we attribute the same reasons for this to the steady slide in this scrip viz. end-of-the-year concerns, rising global crude prices, halt in inflation rate fall, over-valuation of our stocks etc.....?

Honestly, am intererested in comments more because I do hold some shares in this stock and less because I am consistently unable to predict the behaviour/psychology of these Industrial finance/banking institutions. They don't appear to behave in consonance with the markets generally & the banking (PSU or otherwise) sector in particular. :(
 
#3
jaideep said:
Am absolutely overwhelmed by the response to my post. Thanks for nothing people. :cool: :cool:


Hi Jaideep

I also have some share of ifci @ 19 , i am also very confused about this
share..

Traderji please comment on this share


Thanks
Jaspal
 

pkjha30

Well-Known Member
#8
IFCI financials are in a bad condition. During 2003-2004 it had cumulative loss of Rs.322786.90 lakhs. During First half of 2004-2005 it has accumulated another Rs.8832.oo lakhs as loss. EPS was reported -1.70. It has shown gross profit before taxes and other provisions at Rs. 7668.00 lakhs. For the same period in 2002-2003 it had gross loss of Rs. 8445.00 lakhs.

During third quarter of 2003-2004 it had shown loss of Rs. 12621.00.lakhs where as during same period 2004-2005 it had shown profit of Rs. 5422.00.Lakhs.

Staff cost for third quarter was Rs. 5393.00 lakhs in 2003-2004 and Rs. 753.00 lakhsin 2004-05. It has come down significantly.

As indicated by rohit876 its NPA may actually get reduced since some of the projects including greenfield project may pay off the bad loans if not to the fullest extent then certainly to some extent. Loans may be restructured. I came to understand that Hershad mehta damaged ICFI to a great extent in the mother of stock scams.

Another possibility is to hive off bad portfolio to a seperate company (Asset Recovery Ccompany) as happened in case of IDBI.

Merger was spoken about with IDBI and PNB. Both are stuck somewhere in the Government. Finance ministry is unwilling to finance NPAs. PNB is demanding Rs. 5000 Cr. for merger. if it merges with PNB swap ratio may not be attractive to shareholders as in the case of GTB. Its Book value is Rs. -55 only.

The prices are going up and down based on news flow and not on fundamentals. there will be lot of talks about IFCI which can be predicted only if someone is having knowledge of status of decision making process in MOF.

it is the first industrial finance body formed in 1948. Hence there is a lot of prestige attached to it. government may take a decision to revive it in one way or other. but that may take a long time to come. Personally I do not think that it is possible in the first half of this FY. Best option woud be to merge it with IDBI and transfer it asset to ARC as was done with IDBI which was in equally bad shape.

the price of IFCI has touched a low of Rs. 6.65 and a high of Rs. 20.40. If its NPAs are transfered to ARC its balance sheet would look much cleaner and share price will move like that of IDBI. but till such time it will moove in that range based on news flow and will be unpredictable. Long term investment will be risky of highest rating and speculative in nature waiting for the guardian angel to step in, which may eventually happen

I have left many points from balance sheet. I will try to locate a research article and attach to my next posting it might shed more light on thic.
 

Similar threads

Broker Special Offers

Intraday Higher Leverage

Save up to 90% in brokerage and get higher leverage for intraday trades.

Name:Phone:
Email:City:
State:
Are you a day trader?