IFCI Ltd. was listed on the NSE on April 26, 1995. In the last five years, the company has given a massive return of more than 1000%. Will IFCI continue to provide such great returns in the future as well? Let’s explore IFCI’s growth potential and IFCI share price target from 2025 to 2050 in this article.
About IFCI
The Industrial Finance Corporation of India (IFCI) is a government company under the Ministry of Finance. It was established in 1948 as India’s first development financial institution. It supports industries financially and promotes the country’s economic growth. Over the years, IFCI has played an important role in funding large projects in infrastructure, manufacturing, and services. It provides loans, investment services, and financial advice to businesses.
IFCI Business Model
- Providing Loans: IFCI makes loans to businesses, particularly in industries such as manufacturing, power, and infrastructure. It makes money off the interest on these loans.
- Investment in Companies: IFCI invests in companies by purchasing their shares. When these companies grow, IFCI makes money by selling shares at a higher price or receiving dividends.
- Asset Financing: Asset financing lends money to buy large machines, equipment, and infrastructure. IFCI earns money by repaying these funds with interest.
- Advisory Services: IFCI provides companies with financial advice, project planning, and management. It charges a fee for these services.
- Bond Issuance: IFCI raises funds by issuing bonds to investors. It profits by lending this money at a higher interest rate than it pays to bondholders.
- Leasing and Renting: IFCI leases properties and receives rental income from the businesses that use them.
- Government Schemes: IFCI contributes to the operation of various government schemes while also earning money as a service provider.
IFCI Fundamental Analysis
| Stock Name | IFCI Ltd. |
|---|---|
| NSE Symbol | IFCI |
| Market Cap | ₹ 10,784 Cr. |
| 52W High | ₹ 91.4 |
| 52W Low | ₹ 38.6 |
| Stock P/E | 91.4 |
| Book Value | ₹ 22.4 |
| Dividend Yield | 0.00 % |
| ROCE | 10.2 % |
| ROE | 2.48 % |
| Face Value | ₹ 10.0 |
| Shareholders | Mar 2023 | Mar 2024 | Dec 2024 |
|---|---|---|---|
| Promoters | 66.35% | 70.32% | 72.57% |
| FIIs | 2.00% | 2.29% | 2.64% |
| DIIs | 2.29% | 2.03% | 1.60% |
| Government | 4.70% | 3.99% | 2.88% |
| Public | 24.68% | 21.37% | 20.32% |
| No. of Shareholders | 5,20,604 | 8,26,079 | 9,96,406 |
Key Factors Driving IFCI Future Growth
- Government Support: The Indian government provides strong support to IFCI, assisting in its raise of funds and maintaining stability.
- Infrastructure Development: India is focussing on infrastructure projects such as roads, railways, and power plants, which presents more opportunities for IFCI to invest and grow.
- Financial Services Demand: As businesses and startups require more loans and financial assistance, IFCI plays an important role in providing funds, which leads to its growth.
- Better Loan Recovery: IFCI is working to recover past loans more effectively, improving its financial position and allowing it to fund future projects.
- New Funding Sources: IFCI is exploring new ways to raise money, such as issuing bonds and receiving funds from various financial institutions.
- Digital Transformation: IFCI utilises digital technologies to make loan processing and other financial services faster and more efficient, so attracting more customers.
- Strategic Partnerships: IFCI is forming partnerships with banks, financial institutions, and other organisations to broaden its reach and improve its services.
- Economic Growth: India’s growing economy means that more industries will require funding, giving IFCI a larger market to serve.
- Regulatory Changes: Positive changes in financial regulations and government policies may enable IFCI to expand its services and increase profitability.
Pros of IFCI
- Strong Profit Growth: IFCI has achieved a strong profit growth of 27% CAGR over the last three years.
- Low P/B Ratio (Undervalued Stock): IFCI has a low Price to Book Value (P/B) ratio of 1.89, which indicates that it is trading close to its intrinsic value and may be undervalued.
- Increase in FIIs Holding: Foreign Institutional Investors (FIIs) have increased their holding to 2.64% in December 2024 from 2.60% in September 2024, which indicates growing confidence in the IFCI future potential by the FIIs.
Cons of IFCI
- Decreasing Sales – IFCI’s sales have been decreasing at a CAGR of -7% over the last five years.
- Low Return on Equity (ROE): Over the last five years, IFCI’s average ROE is -19.1%, which shows that IFCI is not using shareholders’ funds efficiently to generate profits.
- Low Return on Capital Employed (ROCE): Over the last five years, IFCI average ROCE is 2.53%, which shows that IFCI is not using its capital efficiently to generate profits.
- Overvaluation Concern: IFCI is trading at a PE ratio of 95.7, which is relatively higher than the industry average of 19.2, which indicates that the stock may be overvalued compared to its peers.
- Decrease in DIIs Holding: Domestic Institutional Investors (DIIs) have reduced their holding to 1.60% in December 2024 from 1.64% in September 2024, indicating a decline in DIIs confidence in the company’s future growth prospects.
| Years | Target Price |
|---|---|
| IFCI Share Price Target 2025 | ₹51 to ₹70 |
| IFCI Share Price Target 2026 | ₹60 to ₹85 |
| IFCI Share Price Target 2027 | ₹80 to ₹110 |
| IFCI Share Price Target 2028 | ₹90 to ₹140 |
| IFCI Share Price Target 2029 | ₹110 to ₹180 |
| IFCI Share Price Target 2030 | ₹130 to ₹240 |
| IFCI Share Price Target 2035 | ₹260 to ₹700 |
| IFCI Share Price Target 2040 | ₹510 to ₹2140 |
| IFCI Share Price Target 2050 | ₹2100 to ₹12800 |
Conclusion
Over the last five years, IFCI has experienced significant growth and provided investors with impressive returns. With strong government backing, a focus on infrastructure development, and rising demand for financial services, the company has several growth drivers in place. However, challenges such as declining sales and a high price-to-book ratio present potential risks. For the latest updates, you can visit IFCI official website.
Disclaimer
This article is for educational purposes only. It is not a stock recommendation and should not be treated as such. Please ask your financial advisor before making any investment decision.