IDFC First Bank Limited

Stock Opportunities
3054

Dear fellow members,

I’ve been through a few messages here and there on this long thread and I believe this has not been discussed. If it has been I apologise in advance.

Disclosure: I do have a small position in IDFC First bank.

The bank and its CEO first came to my attention after its merger. The bank looked decent and the CEO even more so. It is during COVID that V.V got a margin call. He did an interview at the time and that is when I realised that you rarely find people like that. Anyways I haven’t been able to go into much detail as many of you have, but I managed to do a back of the napkin 5 year valuation which is given below. Now, I’m aware many of you might not agree with the method I used and that’s fine by me.

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I waited for a while before I made a position here to see if the management walks the talk. Found them very reasonable and bought a part of the business about 3 months ago.

My thoughts are in two parts:

PART 1

  1. Does this bank have the potential to be the next kotak bank?
  2. If yes, can you please share your (personal) conservative estimates both for the bank and the industry? (I would rather not take the estimates in articles written either by journalists or sell side analysts)
  3. If not then why not?
  4. What would be the reasons or circumstances under which the bank may fail?

I do believe the management has a long term approach - shooting one bird at a time. The addressable market in India is fairly big yet competitive. I’m unaware of the behaviour that is incentivised and penalised in the culture of the bank. I am strongly biased here, so feel free to go the other way.

PART 2:
I certainly am not an expert/veteran on Indian banks as many of you are. However, I did start to do an apple for apple comparison of the important parameters between IDFC First and Kotak (this is almost done I think). I only know of Aditya Puri and Uday Kotak so hypothetically speaking, let’s say VV is 75% or UK. So I could be dead wrong here as well for comparison. To be added for comparison were Federal bank and a few other banks who has funded assets of about 100,000 Cr – 150,000 Cr. Attached is the excel for the same. Would anyone be willing to develop this any further and share?

IDFC - Comparision.xlsx (13.0 KB)

Regards

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