Is IFCI worth a Billion Dollars !?…Significantly Down at Rs 25 is it a Buy or Bye Bye ! ?
On the face of it IFCI looks inviting at Rs 25…The Networth is over a Billion Dollars at Rs 5100 crs + The Book Value is now over Rs 70…this was also the Share Price when 2011 began as it looked a strong contender to apply for a Banking Licence under the new guidlines that were awaited ….this was also the reason had blogged earlier to consider playing IFCI at Rs 50 levels through buying Calls
……but the concerns are plenty….can we trust this Book Value of Rs 70+ ? or can the Networth of Rs 5100 + crs be seriously eroded ?
2011 has been another severe reality check year for IFCI on the bourses as the Share Price simply sunk to a recent low of Rs 20 in late November and then bounced back a bit to Rs 25 as New Guidelines for applying for a bank were not in favour of IFCI ,it’s exposures to problem companies like GTL Infra played up and FIIs simply began dumping IFCI on the bourses from July 2011….even Corporate Governance Issues began casting a shadow…The Board of Directors assert in their Report for FY 11 that the quality of Assets is excellent…Reality belies this assertion
Clearly IFCI cannot survive or function without Government Support…Borrowings of over Rs 19000 crs are largely from the Government directly or from PSUs like LIC and SBI and many banks…Government has even guaranteed borrowings from other sources…These ,alongwith the Networth fund a Loan Book of Rs 13600+ crs at September 2011 and Net Investments of Rs 8000 crs +
So is IFCI at Rs 25 a Buy or it’s Bye Bye ! ?
Even though the auditors,Chokshi and Chokshi have given a Clean Report for FY 11,2011 has thrown up the danger of rising NPAs and Diminishing Value of Investments
Ten Years ago I had given IFCI a dubious sobriquet of I F….. C ountry of I ndia !…Then as it revived with Government support,I recommended it very strongly in December in 2006 at Rs 16…it zoomed to Rs 130 inside a year before retracing as the Strategic Investor Bidding Collapsed….In 2010 it again showed buoyancy on great expectations of applying and being granted a Banking Licence under New Guidelines that were awaited….Price again crossed Rs 70…..Then the 2011 Reality Check came in and IFCI has sunk to recnt lows of Rs 20
Now I have to label it I F….. C ountless I nvestors ! …that’s why I have also categorised this Blog under ‘When the Heart Explodes through the helpless Mind ‘ !