Why IFCI Share Price is Rising

Recently, Indian economy has witnessed robust growth. It is driving a surge in demand for financial services.

Traditional banking systems often struggle to cater to the diverse needs of the burgeoning economy. NBFCs (Non-Banking Financial Companies) have effectively filled the gap left by banks.

NBFCs are instrumental in boosting economic growth by extending credit to underserved sectors. They also play a crucial role in financial inclusion, reaching out to individuals and businesses that traditional banks may overlook.

Among the prominent NBFCs is IFCI, a government-owned institution with a rich history. Established in 1948, IFCI has been a pioneer in the Indian financial sector, contributing significantly to the country's industrial development.

The stock has witnessed a meteoric rise, with its share price surging 583.4% in the past year alone. This momentum continued in 2024, with a remarkable 197.3% gain.

Recently, the rally has intensified as the stock climbed 39.4% in the past month.

What's driving this extraordinary performance?

Let's delve deeper.

#1 Anticipation of Upcoming Quarterly Results

IFCI share price is rising primarily due to the anticipation of its upcoming financial results. The company is likely to announce quarterly results on 8 August 2024.

This anticipation is rooted in the company's recent turnaround in financial performance. For the first time in seven years IFCI reported a profit in the financial year 2023-24. This return to profitability has significantly boosted investor confidence.

Investors view FY24 comeback as a strong indicator of IFCI's potential for sustained growth and stability. This optimism is further fuelled by the company's strategic expansion into government and private corporate advisory services.

As the date for the financial results announcement approaches, the market is buzzing with positive speculation.

Investors are betting on continued good performance. They expect that the positive trends seen in the last year will carry over into the upcoming results.

#2 Continuous FII Buying

The surge in IFCI's share price can be attributed to the heightened interest from Foreign Institutional Investors (FIIs). FIIs increased their stake from 1.5% in quarter ending 2023 to 2.4% in the June 2024 quarter.

Take a look at FII holding in IFCI.

IFCI Share Holding Summary (June 2023 - June 2024)

Quarter	FY20	FY21	FY22	FY23	FY24
FII Holding (%)	1.5	1.9	2.1	2.3	2.4

Source: Equitymaster

FIIs are global investment entities. They are known for their substantial financial resources and in-depth market research.

FIIs are often seen as market trendsetters. Their investment decisions can influence the overall market sentiment, encouraging other investors to follow suit.

The overall positive outlook for the Indian economy and the NBFC sector has made the country an attractive investment destination for FIIs. As a prominent player in the NBFC space, IFCI has naturally benefited from this broader trend.

The confluence of these factors has driven its share price to new heights.

What Next?

Looking ahead, IFCI's future appears promising as it continues to diversify and expand its services. The company's strategic focus on advisory services, both in government and corporate sectors, positions it well for sustainable growth.

As the project management agency for various production-linked incentive (PLI) schemes and the monitoring agency for capital subsidy schemes like the FAME scheme.

IFCI stands to benefit from ongoing and future government initiatives aimed at boosting various industry.

The infusion of Rs 5.0 billion (bn) by the government, provides a strong foundation for IFCI to pursue new opportunities. This substantial government backing ensures financial stability and opens doors for further collaborations and projects.

IFCI's corporate advisory services, including financial, ESG, and project advisory, are likely to see increased demand as more companies focus on sustainable growth and compliance with regulatory standards.

The company's role as the nodal agency for monitoring loans from the Sugar Development Fund highlights its importance in critical sectors, potentially leading to more such roles in the future.

With its valuable real estate and stakes in key companies like Stock Holding Corporation of India, IFCI has significant assets that could be leveraged for further financial strengthening or strategic partnerships.

The company's ability to capitalise on these assets will be crucial in enhancing shareholder value.

Future growth for IFCI may also involve exploring new areas within the advisory space, such as digital transformation and technology consulting, given the increasing importance of these fields.

How IFCI Share Price has Performed Recently

In the past five days, IFCI share price has rallied 20.5%. In the last month, it is up 39.4%.

In 2024, so far its share price is has surged 197.3%. Additionally, it has rallied 583.4% in the last one year.

The stock touched its 52-week high of Rs 91.4 on 25 July 2024 and a 52-week low of Rs 12.6 on 26 July 2023.

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 and its quarterly results.

For a sector overview, read our finance sector report.

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

Happy Investing.

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...