Why IFCI Share Price is Rising

65% in the past 5 trading sessions!

I'm sure you're wondering this would be another popular stock like IRFC or RVNL, that's shown a breakout on charts and has good fundamentals to boast about.

But a closer look would tell you that this company has posted repeat losses for many years now and has registered poor growth across return ratios.

Erstwhile known as Industrial Finance Corporation of India, this state-owned company has become the talk of town.

Yesterday, shares of the company concluded the trading session with a 20% gain, reaching a new 52-week high of Rs 48.1 on the BSE.

And if that wasn't enough, IFCI shares are once again locked in the 10% upper circuit band.

This took its year-to-date (YTD) gains to over 80%, and it's not even a month into 2024.

IFCI operates as a NBFC, established to meet the long-term finance requirements of the industrial sector.

Let's find out why shares of the company have seen a steep rise in recent trading sessions.

Why IFCI Share Price is Rising

#1 Strong Growth Prospects

Since the company's portfolio spans across lending to diverse projects, including airports, roads, telecom, power, real estate, manufacturing, services sector, and other allied industries, investors are hoping that the company could be a strong turnaround candidate.

IRFC and IREDA, the two companies that have rallied big time in the past few weeks, belong to the same industry that lends to multiple companies within these sectors.

If you take a look at IFCI's long term share price chart, clearly, it has underperformed big time.

Taking aside the rally we've seen post August 2023, IFCI shares were range bound for almost five years, hovering in the Rs 10 - Rs 20 per share range.

Due to liquidity constraints, IFCI halted its lending operations since FY22.

But in 2023, IFCI's net losses reduced driven by recoveries and impairment reversal.

Now, all the company needs to grow is capital infusion from the Government of India (GoI)... that could possibly turn around its operations.

Could it be that the government is getting ready to announce something big for IFCI in its upcoming budget 2024?

Which brings us to the other possible reason why IFCI share price is rising...

#2 Anticipation of Q3 Results + Budget 2024

The other possible reason why shares of IRFC have seen a steep rise could be due to the NBFC notifying bourses about its earnings for the quarter ended December 2023.

Earlier this month, the company informed that board of directors are scheduled to meet on 9 February 2024 to consider and approve its quarterly results.

In the quarter ended September 2023, IFCI returned to black and posted a net profit of Rs 1.7 bn compared to a loss of Rs 1.3 bn and Rs 2.4 bn in the subsequent quarters.

It also posted the highest ever operating margin and highest ever revenue since December 2020.

What Next?

IFCI manages the implementation of the production-linked incentives (PLI) schemes of the Indian government, so it'll be nice to see some announcements in the upcoming budget.

A similar movement in its share price can be seen in September last year.

Over the years, rising NPAs and consistent yearly losses have remained a cause for concern for investors in IFCI.

But in the recent past, IFCI has been flawless when it comes to debt repayments while it has also made recoveries from non-performing advances (NPAs) and divest some of its non-core assets.

Apart from managing more than 10 of the government's production-linked incentives (PLI) schemes, IFCI was also selected to manage and help streamline the Rs 100 billion (bn) FAME-II scheme.

How IFCI Share Price has Performed Recently

In the past 5 days, IFCI share price has shot up by more than 65%!

That takes its year to date (YTD) gains to over 80%.

IFCI has a 52-week high of Rs 52.35 hit today and a 52-week low of Rs 9 touched on 28 March 2023.

In the past one year, shares of the company have rallied over 315%.

Here's a table comparing IFCI with its listed peers.

Comparative Analysis

Company	IFCI	Satin Credit	MAS Financial	Ujjivan Financial
ROE (%)	-3.9	0.3	14.4	42.1
ROCE (%)	6.8	8.4	11.5	10.7
Latest EPS (Rs)	-0.9	31.9	43.5	68.5
TTM PE (x)	-	8.0	22.4	8.0
TTM Price to book (x)	3.1	1.3	3.2	1.8
Dividend yield (%)	0.0	0.0	0.4	0.9
Industry PE	11.3
Industry PB	2.4

Data Source: Equitymaster, Ace Equity

About IFCI

Erstwhile Industrial Finance Corporation of India, IFCI is a state-owned non-banking finance company established to cater to the long-term finance needs of the industrial sector.

The company's financing activities cover various kinds of projects such as airports, roads, telecom, power, real estate, manufacturing, services sector, and other allied industries.

To point out some of IFCI's big projects, it has financed projects including Adani Mundra Ports and GMR Goa International Airport.

To know more, check out IFCI's financial factsheet.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...