The troubled institution, IFCI, has expanded its net loss in June quarter to Rs 2.2 bn (0.3 bn in 1QFY02). The financial institution had reported a net loss of Rs 8.9 bn for the full year ended March 2002. Problems of adequate capital and challenging prospects in the financial market has impacted IFCI's quarterly performance.
Income from Operations
Net interest income
Operating Profit Margin (%)
Provisions and Contingencies
Profit before Tax
Profit after Tax/(Loss)
Net Profit Margin (%)
No. of Shares (m)
Diluted Earnings per share*
During the quarter, its interest income witnessed a sharp dip of 30% while interest expenses declined by a marginal 1%. Over 10 times rise in other income was not enough to compensate for the operating loss. IFCI also increased its provisions amount by over 90% in 1QFY03 to clean the balance sheet and increase coverage ratio.
IFCI is expected to get a guarantee from the government to borrow US$ 300 m to meet its foreign currency repayment obligations during 2002-2003. It had received an assistance of Rs 4 bn from the government in FY02. Its liquidity shortfall over the two years is estimated at Rs 71 bn. McKinsey's has recommended a capital investments of upto Rs 88 bn by the government and its stake holders to restructure the financial institution's business operations. IFCI is also in the preliminary stage of discussion with various foreign/domestic partners for strategic alliance, which will result in improving operational efficiency and business opportunity.
Currently, IFCI is trading at a price of Rs 4.5. The stock touched a high of Rs 8 in July in expectations of capital infusion from IFCI's stakeholders and the government. IFCI will have to make cautious move while making loan disbursements in the tough investment environment. However, without adequate capital, its business operations are unlikely to see revival.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407