IFCI has called off its stake sale plans completely after the deal with Sterlite-Morgan Stanley fell through on management control reasons.
We are back on the drawing board as to the valuations of IFCI especially after the stake has been called off yesterday. The stock has been hammered in the market today that is primarily because lot of people have taken positions in the stock in an anticipation of the strategic investors coming, in anticipation of an open offer coming in and also in anticipation of multinational agency IOC coming in and picking up stake up to 10%. But that is not going to happen anymore and that’s the reason why the stock has fallen today.
If one looks at the book value of IFCI, the book value comes for Rs 36 per share and to that if one adds the kind of investment IFCI has on it’s books it will be another Rs 11 or so and to that one needs to add some more aspect like the NPAs which can be recovered and also the fact that some of the real estate assets which IFCI has and that would mean that we are looking at the value of IFCI between Rs 65 to 70 or so. That is the intrinsic value of IFCI which the street is also agreeing and many of the analysts are also talking about as if now, so that is the kind of valuations we are looking at. But going forward for IFCI how will IFCI go from here we understand that it would be a little painful process for IFCI because it has got Rs 1,300 crore of equity infusion which means that equity ratio has improved by Rs 1,300 crore due to the conversions of OCDs given to banks and financial institutions. This has improved the net worth to a certain extent but still for the next 4 to 8 quarters it would be looking at raising money or raising resources via sales of assets and the recovery of loans.
So for the two years, at least we anticipate that IFCI will be focusing on the recovery because if one looks at the NPAs which is there on the books of IFCI it is around Rs 6,600 crore, the good part is that the entire NPA hasn’t provided for so there is recovery process which has to be undertaken, so that the entire NPAs can be recovered. If that happens one is going to see good results coming QoQ and the entire result is based on the recovery which happens from IFCI. So going forward is going to be little tough and we don’t know will there be another process of statistics sale. But going by what the management said yesterday it will take some time before they come out with a new process in the current from and it won’t be the same thing because this time they have to make it very clear whether there will be a management control. Especially because if one is looking at an investor coming in and putting in nearly a billion dollar in a company, one needs to have that kind of control in the company.
We are back on the drawing board as to the valuations of IFCI especially after the stake has been called off yesterday. The stock has been hammered in the market today that is primarily because lot of people have taken positions in the stock in an anticipation of the strategic investors coming, in anticipation of an open offer coming in and also in anticipation of multinational agency IOC coming in and picking up stake up to 10%. But that is not going to happen anymore and that’s the reason why the stock has fallen today.
If one looks at the book value of IFCI, the book value comes for Rs 36 per share and to that if one adds the kind of investment IFCI has on it’s books it will be another Rs 11 or so and to that one needs to add some more aspect like the NPAs which can be recovered and also the fact that some of the real estate assets which IFCI has and that would mean that we are looking at the value of IFCI between Rs 65 to 70 or so. That is the intrinsic value of IFCI which the street is also agreeing and many of the analysts are also talking about as if now, so that is the kind of valuations we are looking at. But going forward for IFCI how will IFCI go from here we understand that it would be a little painful process for IFCI because it has got Rs 1,300 crore of equity infusion which means that equity ratio has improved by Rs 1,300 crore due to the conversions of OCDs given to banks and financial institutions. This has improved the net worth to a certain extent but still for the next 4 to 8 quarters it would be looking at raising money or raising resources via sales of assets and the recovery of loans.
So for the two years, at least we anticipate that IFCI will be focusing on the recovery because if one looks at the NPAs which is there on the books of IFCI it is around Rs 6,600 crore, the good part is that the entire NPA hasn’t provided for so there is recovery process which has to be undertaken, so that the entire NPAs can be recovered. If that happens one is going to see good results coming QoQ and the entire result is based on the recovery which happens from IFCI. So going forward is going to be little tough and we don’t know will there be another process of statistics sale. But going by what the management said yesterday it will take some time before they come out with a new process in the current from and it won’t be the same thing because this time they have to make it very clear whether there will be a management control. Especially because if one is looking at an investor coming in and putting in nearly a billion dollar in a company, one needs to have that kind of control in the company.
