IFCI may jump 50%, says Aashish Tater

Aashish Tater, Head of Research of Fortunewizard.com told CNBC-TV18, "If you see the entire market scenario, take the last two years snapshot the weighted average of Nifty index is 5678. We ran our quant models from three perspectives. First of all the W that we look for is right now a pattern in IFCI itself. If you see the entire next two months planning we feel IFCI is one entity that will get a banking license through merger and that merger could happen either with LIC Housing because that is the only listed space that has actually applied for or Tourism Finance Corp of India because this particular asset otherwise is a dead stock for investment."

He further added, "Now take two months perspective what happens is you get a dividend yield of 5 percent on the stock and you abstain from if they do not get the license. However, if they get this license either through merger or they get merged with Tourism Finance and eventually get the license, the highest share is from the government side. So that particular asset will definitely see some kind of positive moment. If you see last two and half years when this particular story of banking license going on, the weighted average price was Rs 52.5 on upside and on downside it was roughly around at Rs 19.6-19.7."
"Now from risk reward perspective from next two months it is not even a rupee or two, but there is a likely possibility that you get 40-50 percent return from current levels. So we feel that next two months will be very interesting for companies like IFCI where there will be talks of banking license going on and this is one contender," Tater said.
He further said, "So it is more of a quant call that we have taken on this particular stock from a shorter term perspective where we feel even if we lose we will not be losing much on downside because of the valuation it is right now trading at. On potential upside there is 50 percent coming if what we are forecasting, what our models are forecasting can actually go through." Disclosure: Safe to assume stock recommended to clients but no personal position.