IDFC Bank - Thoughts?


(rahulshares) #42

Capital First will not continue to be seperately traded post merger.


(pawan.jhawar) #43

considering the current trading price of capital first (i.e 845), the swap ratio translates to abt. INR 61 per share of IDFC Bank ( i.e. 10% discount to current price of 67). Am I missing something or does the deal indicate lower valuation for IDFC Bank than what the market price suggests.


(abhishkjain2626) #44

Just assume it this way: The bank acquired CapF at Rs.938 per share, as per the closing prices of both on Friday.


(Yogesh Sane) #46

IDFC Bank will issue 137 Cr shares to acquire Capital First. Assuming pooling of interest method, IDFC bank will have a book value of approximately 16,980 Cr against a market cap of approximately 30,000 Cr (at CMP of 63). This will give it a P/B value of 1.8 compared to current P/B of 1.5.

Analysts are hoping for a re-rating IDFC Bank based on Vaidyanathan’s track record of building a retail franchise and merger synergies. This is not an easy task given IDFC Bank’s history, size and nature of its loan portfolio.

Assuming that in 5 years IDFC Bank sells at 3 times book value and approximately 8% growth in book value per year over the next 5 years, book value of IDFC Bank works out to be 25k Cr market cap of IDFC Bank in FY 2023 works out to be 75k Cr. Compared to post merger market of 30k Cr, this will be a CAGR of 20%. Not a bad deal but execution risk is high and a large part of this CAGR is from re-rating which may not happen especially if the book value grows only 8%. A more realistic P/B value could be 2.5 and CAGR works out to be 16%.


(vaibhav) #47

IDFC Bank’s Rajiv Lall & Capital First’s V Vaidyanathan.


(yourraj) #48

Just come across a new concept of micro ATM at Batala near Rly Station which can give an edge to bank for disproportionate growth


(yourraj) #49


(arunkp) #50

(yourraj) #51

image

Old Coverage by edelweiss


(abhishkjain2626) #52

Dear Valuepickrs what is your analysis of fy18 results?

Considering they want to de-grow their legacy infra book which was half of total book, having flat NIIs is not bad. Corporate book grew 35% while retail rose 2x. Stock is languishing near book value. NPA numbers are significantly better than Axis/ICICI which still trade at 2x book. Unlike them no controversial things regarding management. Has a securities and investment banking business i.e a full-fledged financial firm unlike Bandhan/RBL. What could be the overhangs with IDFC Bank?

Disc. Holding CapF


(arunkp) #53

(mahabali3004) #54

NPA numbers are significantly better than Axis/ICICI which still trade at 2x book

IDFC Bank’s NPA numbers are getting worser and income growth is flat. Axis and ICICI are in the category of big boys, and are too big to fail. The same cannot be said for IDFC bank, which requires higher growth and operational efficiency in the upcoming years.

I feel CASA ratio improvement is a big plus. Retail growth is encouraging. But retail play for the bank will be tougher going forward, since competition is very high, when you have NBFCs, SFBs, Non-institutional lenders
competing for the same pie.

Rise in NPAs, fall in NIMs, low ROEs - the story continues YoY! we will have to see if CapitalFirst merger can bring something to the table


(Chemist) #55

What might the reasons for the steep fall in the stock price


(Chemist) #56

(arunkp) #58

(vaibhav) #59

(neopandit) #61

Some observations regarding change in shareholding pattern of IDFCBank as of June 2018. (1) First let the obvious be out of the way. Promoter holding increased from 52.8 to 54.3% and public shareholding decreased from 47.2 to 45.7% (2) Among instt players FPI and mutual funds sold 14.5Cr and 3.02 Cr shares respectively where as corporate and financial instt and banks picked up 3.5Cr shares taking the net instt shareholding down by 13.9Cr shares. These were picked up by promoters (5.10 Cr shares), retail investors (4.79 Cr shares), and clearing member (4 Cr shares). Conclusion: So, as can been seen the major part of the selling was by FPIs. This has nothing to do with promoters playing with the stock. FPI have their own dynamics that has nothing to do with the company. I do not see any issues with the company fundamentals or the management. The FPIs sold close to 8.66% of public shareholding during Q1. regards,


(Sandokan) #62

Stumbled upon this thread purely by chance. Having read the previous posts, I do not agree with this statement. There are a couple of posts which cast doubt, rightly IMHO, upon the credentials of the management. The management seems to have been riding the “hope” wave and have not delivered on their promises. Having said that, it may be that this company may yet turn out to be a multibagger, but the question evidently arises…when? I think, not in the next 3-4 years, based upon their performance.

Please feel free to correct me.

Regards


(vaibhav) #63

The bet is basically on new ceo mr vaidyanathan, who turned around capital first and on mr. avtar monga, coo and retail head. CASA for example has been showing good growth. 5700cr in fy18 n expected to cross 10,000 cr in fy19 as per management commentary. Retail assets are also growing fast. The merged entity with capital first would have 40-45% retail component out of the total loanbook on day 1.

Disclosure : invested from higher levels


(neopandit) #64

This is not to correct you in anyway :smiley: Just some clarification (1) By company fundamentals I am saying the direction in which things are moving. I agree they have not been as successful as others but the retail book is growing and quite fast. The environment they started in has been challenging too. Others who had gathered the critical mass could deal with it better. But then this is a private sector bank that is available at public sector valuation. I believe the problems are priced in. (2) About management, I am talking relative to PCJ, Satyam or even Chanda Kochhar kind of management. (3) Lastly, like most others I invested not looking at the glorious(??) past but for the post merger entity. Perhaps it was better to invest in CAPF to enter the same entity but if I mistake not IDFCBank has more FnO volumes, higher IV and hence opportunities to hedge / earn some money. Advantage of CAPF is that given the merger ratio (13.9), CAPF is available at a discount - most of the times. regards,