Idfc Bank Ltd - Announcement under Regulation 30 (LODR)-Credit Rating
This is to inform you that ICRA Limited (ICRA) has revised its rating for Non-convertible Debentures (NCDs) of IDFC Bank from AAA (Stable) to AA+ (Stable). This revision reflects ICRAs expectations that the banks profitability, even after the proposed merger with Capital First Limited, would remain subdued in the near to medium term.
The above is however expected to be offset by significantly better asset quality for the merged entity as IDFC Bank has significantly provided for the stressed assets before the merger and shall result in limited credit provisioning going forward.
Disclosure - Invested
The final NCLT hearing of the proposed merger between Capital First and IDFC bank was to b at 10:30 am on December 5th. But havenāt heard any news or press releases about the same on the BSE website or on any other news outlet.
Is there any news / information about the same that Iām missing?
Thanks
NCLT approves scheme of arrangement between IDFC Bank & Capital First.
CNBC report
If any one wants to stay invested in capital first then better sell capital first and buy idfc bank as it has presently very. Good arbitrage opportunity
I think it is other way round, correct me if I am wrong.
10 shares of CF at 545 per share = Rs. 5450
These 10 shares would give you 139 shares of IDFC First Bank.
139 shares of IDFC First Bank at CMP of 39.3 from open market would cost = 139*39.3 = Rs.5462.7
Ignoring transaction cost.
Yes, 10 shares of capital first u will get 119 shares of idfc bank in mergerā¦ But if u sell in mkt u will be able to buy 139 shares shares
ā¦
In merger, u will be allotted 139 shares, not 119
IDFC bank has About 0.59% npas , With no more provisioning requirements as per the management (with some npas also expected to become performing in current quarter). About 1.1% is the nnpa for capf.
Positive is that a retail-centric private bank headed by a good CEO (Mr. Vaidyanathan) , having low npas (merged entity nnpa should be 0.7% imo with very good provisioning coverage ratio, my guess at arnd 75%) is trading at arnd BV.
Negative is its small deposit-base, high interest bonds maturing not before 2 more years.
Disc: invested.
Also cost would be increasing for next 2-3 years as they would increase branch network.
However, once the branch network is in place, hopefully retail deposits would increase, high interest bearing bonds would decrease. Vaidyanathan is young CEO who still has around 15 years to run the show.
After merger with idfc bank, as a shareholder of capital first what I am supposed to know?
after merger, there might be some delay to get IDFC First bank shares credited in to your DMAT account unablilng you to sell shares for that periodā¦
Has the record date been announced?
31-12-2018 is the record date. I think 27-12 will be the last trading day for the company.
In an interview, vaidyanathan mentioned last day will be 30th dec and 31st dec 18 will be record dateā¦
He sounded too bullish in the interviewā¦
Few highlights are:
ā¢ Expecting to increase branch numbers to 500+ from current 200 in next 3 to 4 years.
ā¢ Infra loan book will be reduced to zero.
ā¢ 22-25% retail loan book growth for next 5 years.
ā¢ 15-20% wholesale loan book growth.
ā¢ Will reduce the infra loan book from Rs. 25,000 crore to zero.
ā¢ NIM will improve to 4.5% in next 4 years.
ā¢ Targeting double digit ROE in next 4 years.
ā¢ Loan books of capital first is pretty straight and has no measure restructuring.
ā¢ Confident of increasing retail liability side even in increasing competition scenario.
Attracting retail deposits is the way to go. Low cost capital.
Also, retail loans are small ticket size hence better NIM and risk is well covered.
More importantanly, It will be a better business strategy in terms of costs of operations and longevity, If they are able to use technology to accomplish the above. As opposed to commencing branches, which is an expensive affair, and there is plenty of competition from HDFC, YES, Indusind and sarkari banks anyway.
So, when Mr. Vaidyanathan talked of increasing branches, I wasnt too happy. If I want to invest in a bank whose strength is branches, then Iād go with HDFC bank, whose EPS is consistently growing, and there is nothing stopping it.
Losing infra loan is a good idea. NPA risk is high.
NIM wonāt improve unless they do something different.
Can you please share the interview link?
It was on CNBC TV18ā¦ around 11 AM todayā¦
V Vaidyanathan
Trueā¦ increasing brach concern is very valid point. But branches are required to be built in rural areas wheras in urban, you can take support of technologyā¦
one of the reason I am saying rural areas is because, in rural areas, many co-operative banks (Patpedhis) are closing out because of regulatory issues and scams. All this money will be routed to other commercial banks. Obviously, SBI will have upper hand but IDFC First bank will also the direct beneficiary to this. and it would be defficult for bank to increase retail liability in rural areas with the help of technology instead of branches.