IDFC Bank - Thoughts?


(vaibhav) #106
  1. 25k-30k-35k crore, whatever the CASA is after 3 years, would directly replace the borrowing done at 8.5% to 8.9%. One can make out the additional profits. In addition, there would be retail term deposits too which will reduce cost of funds.

  2. Having heard a dozen+ bank/NBFC managements on concalls/interviews, I think there is none more passionate/committed than Vaidya. nice read https://www.capitalfirst.com/pdfs/v-vaidyanathan-secret-diary-of-an-entrepreneur.pdf

Leads me to believe that since idfc bank + capF is 1.1 times combined BV, and very few FIIs, MFs own it, there’s scope of very fast appreciation as well as massive long term potential as soon as people start to realize the opportunity.

Disc: invested in CapF, views are biased.


(TT) #107

There’s a flipside to this, there are also crores of retail shareholders who have been stuck in the counter for years. Don’t forget the massive equity base, which, as you said, is not held by institutions. I wouldn’t be surprised that it will take a lot for the stock to have “fast appreciation”, a couple of quarters of good performance will not do it. Hoping that one fine day the sentiment will change universally and you will have “fast appreciation” is pure speculation and hope.


(neopandit) #108

I have never understood this argument of large equity base hampering price appreciation. Merger is immediately EPS accretive (see prev posts) so new shares are bringing in more good biz than they are paying for. On top of it 15-20% CAGR is expected by Vaidya. The PE is suppressed and can see a re-rating.
Price = Earnings x PE so where is the question of large equity base? It is just a fashionable excuse / a myth spread knowingly or unknowingly, every time the stock makes an up move. If you believe earnings can not grow or PE remains half the average of private sector banks even after 4-6 quarters then that is your opinion.
RIL has larger equity base, more debt, and lower margins than a bank (obviously) and still it has no problem in appreciating when the big guys want it to be. Besides what is he free float post merger? 40% by IDFC, 10% by Warberg, 3% Vaidya, 7% Govt of India, another 10% Goldman Sachs, Govt of Singapore - so close to 70% is not coming in market at all.


(TusharSB) #109

Equity expansion will happen and it is not bad. you are right in saying that it should looked from business growth and EPS perceptive. There are so many examples of companies with huge equity base & they have given decent returns … RIL is one of them … Mr. Vaidya has time & again proved that he can turn things around, with 3% equity he is committed too. I don’t see any reason why IDFC bank can’t grow, if economy can grow @ 7-8% & public sector bank continue to lose business.


(vaibhav) #110

One should not consider porinju or anyone a substitute for his/her own research. Just posting his thoughts on idfcbank, capf (from 9:30 sec)


(neopandit) #111

I have never followed any big shots. Typically they sing after doing their thing. Still, beyond anything else this brings lot of visibility. I am sure there will be more than a few FPIs and Mutual Fund honchos that will start probing IDFC Bank more seriously after those 2 minutes :smiley: