IDFC slips as high foreign shareholding hinders in banking foray plan

IDFC fell 1.25% to Rs 102.60 at 9:38 IST on BSE after the company said it is not eligible to obtain a bank licence as foreign shareholding in the institution exceeds the permissible limit of 50%.

The announcement was made after trading hours on Thursday, 19 December 2013.

Meanwhile, the BSE Sensex was up 75.42 points, or 0.36%, to 20,784.04.

On BSE, so far 2.29 lakh shares were traded in the counter, compared with an average volume of 13.53 lakh shares in the past one quarter.

The stock hit a high of Rs 103 and a low of Rs 100.45 so far during the day. The stock hit a 52-week high of Rs 185.35 on 7 January 2013. The stock hit a 52-week low of Rs 76.25 on 28 August 2013.

The stock had underperformed the market over the past one month till 19 December 2013, falling 2.44% compared with the Sensex's 0.87% fall. The scrip had, however, outperformed the market in past one quarter, rising 1.37% as against Sensex's 0.30% rise.

The large-cap infrastructure financing firm has an equity capital of Rs 1516.22 crore. Face value per share is Rs 10.

IDFC had filed an application seeking banking license from the Reserve Bank of India (RBI) on 1 July 2013. However, the company said it is not eligible to obtain the licence as foreign shareholding in the institution exceeds the permissible limit of 50%.

In this regard, IDFC's board has approved a postal ballot process to seek an enabling resolution from shareholders to keep reducing the foreign shareholding in the company to below 50% to comply with the RBI norms for converting into a bank.

The RBI in its guidelines on banking licences had said that a company desirous to convert into a bank must be owned and controlled by resident Indians.

IDFC said that at the time of submitting its application to the RBI for bank licence in July 2013, the ceiling on foreign shareholding in the company was 74%, while the actual shareholding was around 53.17%. Foreign shareholding as on 6 December 2013 was 51.27%.

IDFC said in case if it does not get a banking licence, then the foreign shareholding limit will be restored to 74%

IDFC's consolidated net profit rose 2.33% to Rs 486.75 crore on 5.38% growth in total income from operations to Rs 2148.46 crore in Q2 September 2013 over Q2 September 2012.

IDFC is an integrated infrastructure finance player providing end to end infrastructure financing and project implementation services. The company also offers asset management services through IDFC Mutual Fund.

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