Synopsis: Shares of IFCI Ltd moved higher during the trading session even as the broader market remained under pressure. The rise in the stock appears to be linked to fresh developments around the long-awaited public listing of National Stock Exchange of India.
The shares of this PSU company majorly engaged in catering long term finance needs of the industrial sector, jumped up to 11 percent despite overall market down over 1.5 percent.
With the market capitalization of Rs. 15,465 Crores, the shares of IFCI reached an intraday high of Rs. 59.83 per share, raising nearly 12 percent from its previous day close of Rs. 53.95 and is trading at a P/E of 38.7 whereas industry P/E stands at 18.1
Reason behind the rally
Shares of IFCI Ltd have risen sharply and have gained 11 percent during the day even while the overall market was trading weak. The reason for the sharp upsurge was the positive movement seen in the much awaited IPO of the National Stock Exchange of India. The exchange has reportedly appointed 20 merchant bankers and eight law firms to commence the process for its public listing. This indicates that the IPO process is moving forward.
Investors are positive about IFCI mainly because of their indirect holding in the NSE. IFCI indirectly holds 4.4 percent of the NSE through their subsidiary company named Stock Holding Corporation of India Ltd. IFCI holds 52.68 percent of the stake in the Stock Holding Corporation of India Ltd.
Investors are expecting that since NSE is one of the largest stock exchanges to be listed via an IPO in India, the value of the shares for IFCI would increase if the valuation of NSE increases following the IPO. The value of the stake held indirectly by IFCI via their subsidiary company would increase. Hence, the shares of IFCI have seen a sharp upsurge even while the overall market was trading weak.
About the company and financials
IFCI is an Indian government owned NBFC majorly engaged in catering long term finance needs of the industrial sectors which includes airports, roads, telecom, power, real estate, manufacturing, services sector and many more. The company’s financial products include project Finance, corporate finance, Syndication & Advisory, Structured Products.
Out of Rs. 455.86 Crore revenue from operations, interest income, Fees and commission Income, net gain on fair value changes and sale of products contributes Rs. 113.11 Crores, Rs. 150.95 Crores, Rs. 110.60 Crores and Rs. 74.49 Crores respectively and the rest is contributed by dividend, rental and sales of services income.
Year on Year analysis: Revenue from operations has decreased from Rs. 459 Crores to Rs. 456 Crores, down 0.6 percent. Financing profit has decreased from Rs. 117 Crores to Rs. 27 Crores, down 77 percent and net profit has decreased from Rs. 317 Crores to Rs. 21 Crores, down 93 percent
Quarter on Quarter analysis: Revenue from operations has decreased from Rs. 735 Crores to Rs. 456 Crores, down 38 percent. Financing profit has decreased from Rs. 385 Crores to Rs. 27 Crores, down 92 percent and net profit has decreased from Rs. 317 Crores to Rs. 21 Crores, down 93.3 percent.
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