Michael: I am very bullish on IFCI. I know lots about this company via extensive due diligence, and am VERY impressed with the individuals involved. I appreciate your constructive criticism and pessimistic attitude. It challenges us to critically analyze IFCI. However, regarding dilution, I would assume stock is restricted, generally for 2 years. Additionally, the limitation upon your approach is that it looks at the past only, and not the future. True, we can learn from the past, but as the disclaimer says, "past results are not indicative of future performance."
With that said, based upon the extensive amount of DD I have performed, without any new contracts, I am looking for 2.5m to 3.5m in earnings for FY97, which based on 6,000,000 shares comes to .41/sh to .58/sh. Even if double the amount of shares are issued in FY97, which I dont think will occur, we still see .20 to .30 share. Both Kealy of IFCI and Thompson of Concepts have stated that they cringe at issuing shares for acquisition at this level. Thats why Concepts deal was all debt at this point. Once sh price goes higher, they hope to replace some of the debt with equity. I seriously doubt they would issue more equity for acquisitions at this level. Both were very concerned about dilutive effect.
Notice I stated without any new contracts! Look for new contracts and more acquisitions by end of FY97, and therefore, more earnings. Sorry about the long post. :-) GG |
