IFCI-A Bank In The Making

Way back in Dec 2008, we had recommended IFCI at Rs.21. And once again, all those who had the conviction and faith, remained invested and today sit on good profits. And at the current price too, IFCI remains one of the best low priced picks in this pack.

Financially, it is doing very well, having made great strides since the time in 2007 when it was looking for a suitor in for a 26% stake sale. Though suitors were there, no one was willing to come forth with the right price and the sale idea was eventually scrapped. And since then IFCI has been doing very well on the financial front. In H1FY11, it posted a topline of Rs.1111 crore and a net profit of Rs.320 crore.  

There are two main triggers in the stocks – first is obviously the expected banking license. IFCI, based on the discussion paper issued by RBI, is more than eligible. And once that license comes, IFCI will be transported to a new arena. It will be a complete metamorphosis.

The second trigger is the listing of its subsidiary. There have been talks for some time now about its plans to list its factoring services arm and more clarity on this could push up the prices further. Today, IFCI is no longer a beleaguered financial institution. It is a profit making NBFC, which could soon get a banking license.