IFCI - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.9
| Stock Code | IFCI | Market Cap | 15,608 Cr. | Current Price | 57.9 ₹ | High / Low | 74.5 ₹ |
| Stock P/E | 51.5 | Book Value | 6.53 ₹ | Dividend Yield | 0.00 % | ROCE | 14.9 % |
| ROE | 2.97 % | Face Value | 10.0 ₹ | DMA 50 | 54.6 ₹ | DMA 200 | 54.5 ₹ |
| Chg in FII Hold | -0.02 % | Chg in DII Hold | 0.00 % | PAT Qtr | 6.85 Cr. | PAT Prev Qtr | 16.1 Cr. |
| RSI | 55.9 | MACD | 1.13 | Volume | 1,78,79,466 | Avg Vol 1Wk | 3,38,03,821 |
| Low price | 35.7 ₹ | High price | 74.5 ₹ | PEG Ratio | 1.95 | Debt to equity | 2.03 |
| 52w Index | 57.2 % | Qtr Profit Var | 112 % | EPS | 1.12 ₹ | Industry PE | 19.7 |
📊 IFCI shows weak fundamentals for long-term investment. While ROCE at 14.9% is strong, ROE at 2.97% is very low, reflecting poor shareholder returns. The PEG ratio of 1.95 suggests overvaluation relative to growth. The stock trades at a P/E of 51.5, far above the industry average of 19.7, indicating stretched valuations. Current price (57.9 ₹) is slightly above DMA 50 (54.6 ₹) and DMA 200 (54.5 ₹), showing neutral momentum but far below its 74.5 ₹ high. Dividend yield is 0%, offering no income support.
💡 Ideal Entry Zone: 50 ₹ – 55 ₹ (aligned with DMA support levels and valuation comfort).
📈 Exit / Holding Strategy: If already holding, consider short- to medium-term holding only if ROE improves above 8% and earnings growth sustains. Exit near 65–70 ₹ resistance levels if profitability does not improve. Long-term holding is risky given high P/E and weak ROE.
Positive
- 📌 ROCE at 14.9% indicates efficient capital usage.
- 📌 Quarterly profit variation shows 112% growth, albeit from a low base.
- 📌 Technical support around DMA 50 and DMA 200 levels.
Limitation
- ⚠️ ROE at 2.97% is very weak.
- ⚠️ PEG ratio of 1.95 suggests overvaluation.
- ⚠️ P/E of 51.5 vs industry PE of 19.7 highlights stretched valuations.
- ⚠️ Dividend yield is 0%, offering no income support.
Company Negative News
- ❌ Quarterly PAT dropped from 16.1 Cr. to 6.85 Cr.
- ❌ FII holdings declined slightly (-0.02%).
Company Positive News
- ✅ EPS at 1.12 ₹ shows marginal improvement.
- ✅ Quarterly profit variation of 112% indicates recovery momentum.
Industry
- 🏦 Industry PE at 19.7 vs stock PE 51.5 highlights valuation gap.
- 🏦 Financial services sector remains cyclical, dependent on credit demand and government policy support.
Conclusion
🔎 IFCI is overvalued with weak ROE and no dividend yield, making it a risky candidate for long-term investment. Best suited for speculative investors who can accumulate near 50–55 ₹ and exit near 65–70 ₹ if momentum sustains. Long-term holding is not advisable unless ROE improves significantly and earnings growth stabilizes.