IFCI sells 0.2% share in NSE

The money will help IFCI turn around its operations

IFCI’s asset quality continued to deteriorate quarter on quarter. Image source: Reuters

Public sector company IFCI sold 0.2% equity in the NSE at Rs 925.1 per share.

It recently sold stake in few holdings (including continuous stake sale in NSE), which is positive for the company as raising funds through divestments would improve its capital ratios and hence would set the platform for further growth, an India Infoline report said.

IFCI will require significant capital to turn around its operations.

The GoI owned 55.5% stake in the company as of June 30, 2017. It also holds stakes in NSE and its associate companies -- Stock Holding Corporation of India Ltd (SHCIL), Tourism Finance Corporation of India (TFCI), Himachal Consultancy Organisation (HIMCON), North India Technical Consultancy Organisation (NITCON) and KITCO (formerly Kerala Industrial and Technical Consultancy Organisation).

"IFCI’s asset quality continued to deteriorate quarter on quarter. We believe the entity’s asset quality is likely to weaken further and its Net Interest Income (NII) will remain under pressure given the capital constraints to expand the portfolio," the report said.

Further, with elevated credit provisions, the overall profitability and capitalisation will remain dependent on the extent of recoveries, divestments and fresh capital infusion.

IFCI’s ability to borrow at competitive rates will be critical for it to extend competitive lending rates, and for the sustainability and growth of its business. The stock is available at 0.83x on FY17 P/BV. We have a neutral outlook on the stock, the report said.

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