IFCI rose 3.20% to Rs 51.55 at 12:00 IST on reports the government has shortlisted three consultants for advising it on stake sale in the firm
Meanwhile, the BSE Sensex was up 178.45 points, or 1.11%, to 16242.42.
On BSE, 86.28 lakh shares were traded in the counter as against an average daily volume of 1.03 crore shares in the past one quarter.
The stock hit a high of Rs 52.85 and a low of Rs 50.90 so far during the day. The stock had hit a 52-week high of Rs 61.15 on 9 September 2009 and a 52-week low of Rs 15.25 on 28 November 2008.
The stock had underperformed the market over the past one month till 5 November 2009, falling 7.07% as compared to the Sensex 4.76% fall. It underperformed the market in past one quarter, correcting 3.66% as against 1.01% rise in the Sensex.
The mid-cap state-controlled project financier has an equity capital of Rs 737.84 crore. Face value per share is Rs 10.
The current price of Rs 51.55 discounts the company's Q2 September 2009 annualised EPS of Rs 10.33, by a PE multiple of 5.
The move comes two years after an abortive attempt to induct a strategic partner in IFCI after the company did not agree with the demand of the highest bidder, Sterlite-Morgan Stanley joint venture, for management control.
According to reports, the government will soon appoint one of the three consultants - Boston Consultancy Group, Ernst & Young and Mckinsey - for advising on stake sale in the financial institution, future course for the institution, growth drivers and the company's role in the changed market environment. The consultant would take six months to submit its report.
Currently, the government does not have any direct ownership in IFCI. State-owned insurance firms and financial institutions, such as LIC, IDBI Bank and Punjab National Bank, own around 28.5% in IFCI.
The main hurdle in the way of the stake sale, reports suggest, is the lack of clarity on the optionally convertible debentures worth Rs 523 crore issued by the government.
IFCI's net profit declined 26.5% to Rs 190.48 crore on a 14.2% fall in sales to Rs 514.16 crore in Q2 September 2009 over Q2 September 2008.
IFCI provides project financing, financial services and comprehensive corporate advisory services. The company also provides equipment finance, equipment credit, equipment leasing, corporate loans, short-term loans and working capital loans to meet the specific needs of corporates.