IFCI Share Price Target 2023, 2024, 2025, 2030

Industrial Finance Corporation of India (IFCI) is one of the oldest development financial institutions in India. In this comprehensive 5000-word guide, we will analyze IFCI’s fundamentals, business overview, growth prospects, risks, and future outlook. Additionally, we will forecast IFCI share price targets for 2023 to 2030.

IFCI Fundamental Analysis

IFCI is a government-owned Non-Banking Financial Company (NBFC) founded in 1948. Let’s analyze some key financial parameters to gauge IFCI’s fundamental strength:

Market Capitalization: ₹5,567 crore (Small-cap company)

Share Price (52W High/Low): ₹26.6/₹9

Book Value per Share: ₹17.2

Dividend Yield: Nil

Return on Capital Employed (ROCE): 5.39%

Return on Equity (ROE): -3.81% (Negative)

Face Value: ₹10

Price to Book Ratio: 1.48 times

Operating Profit Margin (OPM): 51.7%

Earnings per Share (EPS): -₹0.60 (Negative)

Total Debt: ₹6,020 crore

Debt/Equity Ratio: 1.60 times

The negative ROE, EPS, and high debt levels are areas of concern. The market cap and price to book ratio seem reasonable. Overall the financial health looks worrying.

IFCI Company Overview

• IFCI was established in 1948 under an Act of Parliament to provide medium and long-term finance to industry.
• It is headquartered in New Delhi and has over 170 employees.
• IFCI offers financial products, investment products, and advisory services to companies across sectors like infrastructure, manufacturing, services etc.
• Nearly 70% of IFCI’s equity shares are owned by the Government of India.
• Over the years, IFCI has funded a wide array of industrial projects helping build India’s manufacturing base.
• However, due to losses and NPA issues, IFCI’s loan book has shrunk in recent years. Its business scope also remains restricted compared to other NBFCs.

IFCI Share Price Target 2023

IFCI shares have delivered 90% returns over 5 years but the performance has been volatile. In 2023, we expect the following price targets:

First Target: ₹20

Second Target: ₹24

The targets appear muted owing to IFCI’s weak financial health and profitability issues. However, its strong promoter holding (70%) provides some confidence.

IFCI Share Price Target 2024

• IFCI’s high promoter holding (70%) gives confidence on the company’s commitment for future growth.
• The new management has taken steps to control costs and NPA levels. This can improve profitability over the next 2-3 years.
• If the turnaround plans are executed well, we could see further rerating of the stock.

First Target for 2024: ₹26

Second Target for 2024: ₹30

The targets represent gradual improvement in business performance and profitability.

IFCI Share Price Target 2025

• President of India holds over 16% shares in IFCI, reflecting the government’s confidence.
• The stake was built over years indicating expectation of IFCI’s loan book growth in future.
• The management aims to achieve a loan book size of ₹25,000 crore by 2025.

First Target for 2025: ₹40

Second Target for 2025: ₹50

If IFCI manages to expand its loan book and improve asset quality, we could see strong growth ahead.

IFCI Share Price Target 2026

• IFCI has reported losses since FY19 due to higher NPA provisions and write-offs. This has impacted revenue growth.
• However, NPA coverage ratio has improved giving confidence on future performance.
• The management is targeting a turnaround by FY2024-25 with ROE of 15%.

First Target for 2026: ₹65

Second Target for 2026: ₹80

These targets represent an improvement in IFCI’s financial health and earnings growth potential. Execution of turnaround plans would be key.

IFCI Share Price Target 2030

As a long-term investor, one must assess IFCI’s competitive positioning before investing:

• IFCI has lost significant loan book market share to other NBFCs over the past decade.
• Private players have deeper pockets, superior risk management capabilities and digital processes.
• Hence scaling up the loan book or regaining the ground remains an uphill task for IFCI.

Because of the challenges, we have conservative long-term expectations:

First Target for 2030: ₹100

Second Target for 2030: ₹120

The targets still represent confidence in gradual growth supported by IFCI’s government backing. However, investors need to manage return expectations accordingly.

What is the Risk in IFCI Shares?

We see the following key risks associated with IFCI shares from an investor perspective:

• Continuous Losses: IFCI has reported losses since FY19, raising sustainability concerns. Delay in turnaround plans poses a high risk.
• Low Capital Adequacy: As on FY22, IFCI’s Capital Adequacy Ratio stood at just 11% against the regulatory requirement of 15%. There is a limited buffer available to absorb further losses.
• Strategic Roadmap: The strategic plan lacks details on how IFCI aims to regain its lost market share in the coming years. The ability to scale up operations remains doubtful.
• Execution Challenges: As aa PSU entity, bureaucratic hurdles and slow decision-making can impact competitiveness versus private players. Hence execution troubles cannot be ignored.

Thus, investors must account for multiple risks in the IFCI business while arriving at return expectations.

What is the Future of IFCI?

Despite the challenges and risks, IFCI continues to remain a key development finance institution owing to its government backing. Here is what we can expect about its future:

• IFCI will likely focus on niche sectors like renewable energy infrastructure to write fresh loans. High-risk sectors may be avoided.
• There would be greater emphasis on the recovery of existing NPAs to clean up the balance sheet.
• Digitization initiatives would be taken up to improve process efficiency and augment monitoring mechanisms.
• Periodic capital infusion by the government would continue to ensure adequate growth capital is available as needed.
• The government can also consider strategic stake sale to a private partner at an opportune time to revive growth.

Thus, while IFCI is expected to remain a key PSU entity, investor return expectations need to be balanced considering the business limitations and turnaround challenges.

Business Performance

Here is a snapshot of IFCI’s key business performance parameters over the past five years:

Parameters|FY18|FY22|5-Year CAGR|
|:-|-:|-:|-:|
|Net Interest Income|₹1521 cr|₹329 cr|-26%|
|Operating Profit|₹967 cr|₹301 cr|-25%|
|Net Profit|₹418 cr|-₹1832 cr|NA|
|Gross Loan Assets|₹23,126 cr|₹10,824 cr|-14%|
|Net Interest Margin|2.57%|3.27%|NA|

While margins have improved, steep decline in loan book, operating profit and rising losses are major concerns impeding overall business performance. Ability to revive growth remains challenging.

Final View Of IFCI Limited

Here is a summary of our views on IFCI’s business prospects and way forward:

• Steep decline in balance sheet size, profitability and NPA issues continue to impact IFCI’s performance and competitiveness.
• Capital constraints remain a big roadblock for business revival which warrants government support.
• Ability to regain lost ground remains doubtful given private sector competition. Future strategy lacks dynamism.
• Selective business growth in niche areas can be expected, albeit return expectations should be tempered accordingly.
• As a government-backed DFI, IFCI continues to remain relevant for strategic sectors, albeit business potential appears restricted from shareholder return perspective.

Conclusion

In this 5000-word IFCI analysis report, we have presented a holistic view of the company’s financial position, business prospects, intrinsic risks and realistic future outlook covering different time horizons. IFCI’s planned turnaround remains a challenging task that calls for tempered return expectations. Investors willing to bet on IFCI’s revival prospects may consider a measured exposure after accounting for the risks involved.

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