IFCI rallies 9%, nears 52-week high; stock has surged 39% in one week

IFCI's ratings outlook will change to stable if the company's strategic importance to the GoI increases significantly along with the infusion of sizeable capital, ICRA said in its report

Shares of IFCI continued their northward movement for the second straight day on back of heavy volumes. The stock has  rallied 9 per cent to Rs 16.29 on the BSE in Tuesday’s intra-day trade, and was trading closer to its 52-week high of Rs 16.40 touched on June 24, 2021.

In the past one week, the stock has zoomed 39 per cent, after the rating agency said that the rating outlook will be changed to 'Stable' if IFCI’s strategic importance to the government of India (GoI) increases significantly along with the infusion of sizeable capital. In comparison, the S&P BSE Sensex was up 0.40 per cent during the same period.

At 09:59 am, IFCI was trading 7 per cent higher at Rs 15.99, against 1.08 per cent gain in the benchmark index. The counter has seen huge trading volumes, with a combined 15 million equity shares changing hands in the first 45 minutes of trade on the NSE and BSE.

IFCI on November 30, 2021, informed that the rating agency ICRA has downgraded the long term ratings of debt instrument of the company with negative outlook. The short-term ratings reaffirmed.

The ratings downgrade factors in the continued deterioration in company's liquidity position vis-à-vis its upcoming debt repayment obligations. Also with a significant reduction in the standard loan book, the ability to incrementally manage debt repayments will also remain a challenge, IFCI said in exchange filing.

“The ratings downgrade factors in the continued deterioration in IFCI’s liquidity position vis-à-vis its upcoming debt repayment obligations and the lack of incremental updates on its business revival plan, which envisaged capital infusion from the Government of India (GoI) to turn around the company’s business operations,” ICRA said in rationale.

The Negative outlook continues to reflect ICRA’s expectation of increasing liquidity pressure, which will pose challenges for the company’s debt-servicing ability over the next few months. The rating outlook will be changed to Stable if IFCI’s strategic importance to the GoI increases significantly along with the infusion of sizeable capital, which would improve its solvency and liquidity position and enable it to resume business growth by securing fresh funds, the rating agency said.CLICK HERE FOR FULL DETAILS