IDFC First Bank Limited

[Aniesh7]

[valueseeker9]

Think these numbers don’t include the ESOPS, including that his holding is in excess of 2% of the fully diluted shares. It’s mentioned in the presentation if I remember correctly, you can check.

[Nitin_Nimkar]

Found Article on web

https://www.financialexpress.com/express-mobility/hero-electric-idfc-first-bank-partners-to-offer-electric-two-wheeler-finance-scheme/2443521/

[sahil_vi]

Enough of noise. Lets get data crunching.

Thanks to @Anant sir for sharing this info offline.

We can go to Charges search | Zauba Corp and figure out currently open corporate loans (including tiny MSME loans) for any lender. For IDFC First, I did that.

For IDFC First here is the list of open loans:

[Public] IDFC Bank Open Loans

Offline copy for those who prefer that:
IDFC Bank Open Loans.xlsx (151.5 KB)
[

This will enable us to do next level of due diligence by evaluating point data on corporate loans given post 2018 & VV’s claim of these being pristine pristine. This is now reduced to a data crunching problem.

Broad strokes things to do:
Look at top K loans & figure out how lendee companies are doing financially speaking.

Some high level stats:

1. 2304 open loans.
2. Lowest exposure of 36 lakhs to FALCON FIGHTER FORCE SERVICES PRIVATE LIMITED
3. Highest exposure of 6000 cr to IRB: IRB INFRASTRUCTURE DEVELOPERS LIMITED, IRB AHMEDABAD VADODARA SUPER EXPRESS TOLLWAY PRIVATE LIMITED
4. Total loans is 67000 cr.
5. Average exposure of 23 cr.

Disc: invested, biased. work cut out

Now need to get cracking & analyzing. Anyonee wanting to contribute, do it!!! No better way to build conviction.

More caveats :

1. Charge is not loan but rather option to take loan .need to look at credit rating report too in addition.
2. Some charges could be wrong because companies sometime don’t close charge with mca
3. All charges might not be there since this is 3p data

All these caveats appply.

[sahil_vi]

Before we start analysing this dataset closely it would be worthwhile to track ALL previous corporate stress so that we can corroborate with this list if & when needed:
I’ll add things i remember off the top of my head:

1. Reliance capital
2. Vodafone Idea
3. Dhfl

What am I missing?.

[prashant_patil1]

MOF_Data.xlsx (141.9 KB)

This is latest IDFC First Bank number of branches data from RBI website. As per q3 22 results it had only 599 branches but as per this latest data from RBI website IDFC First bank has 852 branches. How can they increase branches by such pace in couple of months. Am i missing something ? If any one has some understanding on this please throw some light on this.

[Nishit_Shah2]

This discrepancy is with every bank.
This data point is not very reliable.
RBI must not be updating closed branches.

[jockaayush]

This might be due to reclassification
For Ex - The list shows my city having a branch but it’s only an asset disbursement branch and I believe it’s not counted in the 599 branches.
So, if we remove such branches, we should get at the 599 number

Edit
It’s written as MBL-[City Name]

[retail]

idfc first bank having employee salary cost of 720 crores inspite of having only 599 branches and indusind bank having employee salary cost of 620 crores inspite of 2000 branches. also other expenses of both idfc first bank and indusind bank is same of 1800 crores.

[hcpl2000]

Some time back IDFC decided to merge cost of business associates ( all new banks have a sort of non employee base ) into employee cost. I am not sure if IndusInd does it. Could any of our other boarders comment!?

[Yogendra_Reddy]

Hero Electric partners with IDFC first bank for vehicle finance

[raku]

I have an account with idfc bank and there customer relation team whether be it by visiting the bank branch or by calling the bank there service is class apart comparing it to hdfc,axis or even indusind bank .I guess hiring skilled labour is expensive so that might be the reason for higher cost.

[retail]

is idfc first bank undervalued rightnow. with market cap of 27000 crores. homeloan plus loan against property is almost 40% of retail loans. casa is also good. aggressive home loan and gold loan business. idfc mutual fund brand. remember idfc amc has good debt fund track record.idfc first bank has built casa in record time. technology of bank is also good. NIM of 6% which is one of best in banking sector.retail loan guidance of 25% growth.or is something extra legacy account is hidden which we do not know. but mr vaidyanathan is repeatedly telling in interview legacy etc should be forgotten from now onwards.

[sahil_vi]

@retail

idfc first bank

Actually this point has been discussed in depth a few 100 posts ago. Please read .
You need to normalize against # of employees not # of branches. Idfc first has many more employees per branch than other banks. Also, the most important metric is employee costs / aum.

As aum doubles in next 3-4 Years employee costs will grow slower leading to operating leverage.

[jamit05]

Partly the reason for having more employees has been revealed in last Earnings call. Where the management mentioned that their lending/credit card team is in house, and not outsourced or on commission basis.

Bank is big on Credit Card and Retail Lending.

I am glad that the management is investing in Credit Cards business.

Credit Card business gets high valuation.
SBI Cards is valued at 60PE.

[sahil_vi]

One of the most enjoyable experiences for me has been to figure out the quality of credit on IDFC bank books.

The purpose of the exercise is to find large enough exposures that might blow up in our face as bank shareholders.
I evaluated the list of charges i had shared earlier here:

@sahil_vi

For IDFC First here is the list of open loans:

Here is the steps i undertook:
0. Get open charges for institutions of your choice from https://www.zaubacorp.com/charges

1. I sorted all the charges by the charge amount (larger loans have higher propensity to blow up balance sheet).
2. For private companies: I start by googling “XYZ credit rating” & try to find latest one & go through it to understand the last known business health.
3. For public companies I look at their balance sheet & P&L & try to see the interest / operating profit ratio see whether co can cover interest costs.
4. if i cannot find a credit rating report i look for the company on Insolvency and Bankruptcy Board of India insolvency & bankruptcy board can help us help us understand if a co has already had bankruptcy proceedings initiated against it & if so, i take it that this presents no risk to bank because banks are required to recognise such cos as GNPA.
5. I read through the credit rating report & try and understand the risk of insolvency/bankruptcy & take a subjective call (i could be wrong) that this blows up the bank P&L & balance sheet: this is in the column: Subjective assessment score
6. I add some comments on rationale behind subjective score.

Charge Created On	Borrower Name	Charge Holder	Loan amount in cr	Charge Modified On	credit rating	credit agency	Current Credit Rating Since	Subjective assessment score	Credit rating link	Comments
2018-02-06	IRB INFRASTRUCTURE DEVELOPERS LIMITED	IDFC BANK LIMITED	3300		A1	crisil	10-9-2020	9	Rating Rationale
2012-02-10	IRB AHMEDABAD VADODARA SUPER EXPRESS TOLLWAY PRIVATE LIMITED	IDFC BANK LIMITED	2850	2018-04-17	BBB	indiarating	18-3-2015	9	India Ratings and Research: Credit Rating and Research Agency India
2010-09-27	MEP INFRASTRUCTURE PRIVATE LIMITED	IDFC Limited	2121	2013-03-08	Closed	care		NA	https://www.careratings.com/upload/CompanyFiles/PR/19042021061742_MEP_Infrastructure_Developers_Limited.pdf
2008-10-30	UNITECH REAL ESTATE BUILDERS LIMITED	IDFC Limited	1293.219639	2012-06-29	Closed	na	na	NA	na	Must have become GNPA already
2008-11-16	ROBINIA DEVELOPERS PRIVATE LIMITED	IDFC Limited	1293.219639	2012-06-29	Closed	na	na	NA	na	Unitech & Robina charge could be the same charge
2014-05-30	MILLENNIUM CITY EXPRESSWAYS PRIVATE LIMITED	IDFC FIRST BANK LIMITED	1145	2019-09-23	Closed	na	na	NA	na	Part of bank
2020-03-30	RELIANCE JIO INFRATEL PRIVATE LIMITED	IDFC FIRST BANK LIMITED	1000		AAA	crisil		10	Rating Rationale
2013-03-23	VADINAR PORTS & TERMINALS LIMITED	IDFC Limited (As Security Trustee)	950		AA	care		10	https://www.careratings.com/upload/CompanyFiles/PR/Nayara%20Energy%20Limited-08-11-2020.pdf
2011-09-30	GVK JAIPUR EXPRESSWAY PRIVATE LIMITED	IDFC BANK LIMITED	817.0317927	2016-08-05	D	icra	May 2021	10	ICRA Limited	Already identified as GNPA & provided for & full recovery expected.
2011-09-23	THE TATA POWER COMPANY LIMITED	IDFC BANK LIMITED	800	2015-10-26	AA	crisil		10	Rating Rationale	good quality credit
2019-01-31	DOLVI COKE PROJECTS LIMITED	IDFC FIRST BANK LIMITED	800		AA	icra		10	ICRA Limited	100% sub of JSW steel
2019-01-31	JSW STEEL LIMITED	IDFC FIRST BANK LIMITED	800		AA	icra		10	ICRA Limited	Marquee steel company
2022-01-03	JSW STEEL LIMITED	IDFC FIRST BANK LIMITED	800		AA	icra		10	ICRA Limited	Marquee steel company
2015-12-30	AMRIT JAL VENTURES PRIVATE LIMITED	IDFC BANK LIMITED	716.1828647		already insolvent	care	na	10	Insolvency and Bankruptcy Board of India	Holdco for gati infra private ltd. This is a SPV for Gati Infrastructures Private Limited (Chujachen Hydropower Project) | SSERC This is most likely already a GNPA since insolvency proceeding were initiated: Insolvency and Bankruptcy Board of India
2016-03-14	TCI FINANCE LIMITED	IDFC BANK LIMITED	714.6728647		na	na	na	10	TCI Finance Ltd financial results and price chart - Screener	THis is a public listed company. Practically no borrowing any more.
2017-10-19	GOOD HOST SPACES PRIVATE LIMITED	IDFC BANK LIMITED	509		A-	india ratings	10 May 2021	10	India Ratings and Research: Credit Rating and Research Agency India	Hostel, disrupted by covid.
2018-06-25	KRISHNA BHAGYA JALA NIGAM LIMITED	IDFC BANK LIMITED	500		withdrawn	brick work	30 Jun 2021	10	https://www.brickworkratings.com/Admin/PressRelease/Krishna-Bhagya-Jala-Nigam-30June2021.pdf	Already paid back
2012-01-07	JINDAL STEEL AND POWER LIMITED	IDFC FIRST BANK LIMITED	486	2019-03-07	A-	crisil	May 06 2021	10	Rating Rationale	Steel cycle is strong. Co has strong operating profit compared to interest outgo: Jindal Steel & Power Ltd financial results and price chart - Screener
2018-02-06	IRB AHMEDABAD VADODARA SUPER EXPRESS TOLLWAY PRIVATE LIMITED	IDFC BANK LIMITED	450		BBB/stable	india rating	18 Aug 2021	9	https://www.indiaratings.co.in/PressRelease?pressReleaseID=55884	strong parent IRB with A+ rating. The management has represented that the sponsor support would be present for the entire loan tenor and the project will be held by IRBAV till the maturity of its concession period.
2020-08-20	3F INDUSTRIES LIMITED	IDFC FIRST BANK LIMITED	390		withdrawn	care	Dec 20 2021	10	https://www.careratings.com/upload/CompanyFiles/PR/20122021071045_3F_Industries_Limited.pdf Rating Rationale	Interest coverage is healthy (2.1) Interest coverage as increased Plus co has paid back loans: https://www.careratings.com/upload/CompanyFiles/PR/20122021071045_3F_Industries_Limited.pdf
2013-03-27	GURUVAYOOR INFRASTRUCTURE PRIVATE LIMITED	IDFC Limited	360	2014-08-06	BBB/stable	icra	Jun 2020	9	ICRA Limited	Good ebitda margins: Guruvayoor Infrastructure Private Limited Company Profile - India | Financials & Key Executives | EMIS https://www.reuters.com/article/crisil-ratings-idINL3N2EZ2DZ
2017-02-03	KRISHNA BHAGYA JALA NIGAM LIMITED	IDFC Bank Limited	360		AA-/ withdrawn	brick works, india rating	30 Jun 2021	10	Rating Rationale https://www.brickworkratings.com/Admin/PressRelease/Krishna-Bhagya-Jala-Nigam-30June2021.pdf	bonds were prepaid & other rating is positive
2013-07-12	VIZAG SEAPORT PRIVATE LIMITED	IDFC Limited	350	2013-11-12	BBB-	care	March 25, 2021	10	https://www.careratings.com/upload/CompanyFiles/PR/25032021062652_Vizag_Seaport_Private_Limited.pdf	Moderate levewrage, high profit margins
2016-08-22	ADANI ENTERPRISES LIMITED	IDFC BANK LIMITED	350		A+	brickwork	27 Sep 2021	10	https://www.brickworkratings.com/Admin/PressRelease/Adani-Enterprise-27Sep2021.pdf	operating profit enough to pay interest cost for public co, strong promoter: Adani Enterprises Ltd financial results and price chart - Screener
2019-07-26	CHEMPLAST CUDDALORE VINYLS LIMITED	IDFC FIRST BANK LIMITED	350		A+	crisil	Sep 30 2021	10	Rating Rationale	100% sub of chemplast sanmar listed co: Chemplast Sanmar Ltd financial results and price chart - Screener very good liquidity
2012-05-21	DS TOLL ROAD LIMITED	IDFC Limited	332	2015-01-13	issuer not cooperating	brick work		10	Rating Rationale	DS Toll Road Limited (DSTRL, the company), a 100% subsidiary of Reliance Infrastructure Limited (R Infra). Reliance infra is a known stress & has been provided for
2016-08-26	ALLIED BLENDERS AND DISTILLERS PRIVATE LIMITED	IDFC BANK LIMITED	300	2018-06-20	BBB+ / positive	india rating		9	India Ratings and Research: Credit Rating and Research Agency India	The Positive Outlook reflects the infusion of INR1,000 million of funds in ABDPL from a promoter company during 1QFY22 and a likely additional infusion of INR500 million
2016-09-02	PARRY SUGARS REFINERY INDIA PRIVATE LIMITED	IDFC BANK LIMITED	300	2017-02-28	A+/Stable	crisil	May 28 2021	10	Rating Rationale
2019-05-14	CAPFLOAT FINANCIAL SERVICES PRIVATE LIMITED	IDFC FIRST BANK LIMITED	300		BBB/stable	india rating	18 Jan 2022	9	https://www.indiaratings.co.in/PressRelease?pressReleaseID=57279	Recent rating was upgraded, experience with amazon, bnpl for amazon, balance sheet light approach
2020-10-26	TATA POWER SOLAR SYSTEMS LIMITED	IDFC FIRST BANK LIMITED	300	2021-02-05	A1+	india rating	Aug 18 2021	10	India Ratings and Research: Credit Rating and Research Agency India	10-0% sub of tata power. Good solvency publicly listed co: Tata Power Company Ltd financial results and price chart - Screener
2021-03-19	INTERGLOBE AVIATION LIMITED	IDFC FIRST BANK LIMITED	300	2021-06-21	A+	ICRA	Aug 17 2021	10	ICRA Limited	Largest airline in India. Lowest cost airline
2021-03-23	CREDITACCESS GRAMEEN LIMITED	IDFC FIRST BANK LIMITED	300		A+	Crisil	Sep 24 2021	10	Credit Bulletin	One of the leading MFI. Good solvency. CreditAccess Grameen Ltd financial results and price chart - Screener

Working excel copy:
Untitled spreadsheet (1).xlsx (12.7 KB)

Above is the list of 32 largest charges all > 300 cr charges that I evaluated. Here are some conclusions:

1. a charge does not represent an actual loan being given. This is sort of the highest sanctioned loan limit or the borrower by bank. Its harder to figure out whether bank actually have a loan & what is current outstanding.
2. List of open charges can be erroneous since this is based on MCA filings. Specially if a co goes bankrupt it would not be updating the charges. My focus is to think about charges which are risky but not yet bankrupt.
3. Sometimes charges are there for many related companies: holding company, child company & so forth. Sometimes for same amount. These dont represent additive risks IMO & might be an optionality that co asks for (give me ability to take 800 cr in sub & parent i will pick how to utilize with what proportion).
4. 10/32 charges have either been paid already OR already insolvent/declared GNPA by bank (eg: the GVK JAIPUR EXPRESSWAY PRIVATE LIMITED is already declared GNPA by bank) & do not present any more risk.
5. 16/22 (73%) are rated A- & above.
6. 6/22 (27%) are rated BBB/BBB+. These are where I have used my subjective judgement. I do not see a default risk right now but some are running it close. Eg: 3F INDUSTRIES LIMITED
7. All in all, I am fairly confident that a big blow up of P&L is unlikely given the deep dive I have done (> 300cr charges).
8. If we look at loans given post merger (2019 & beyond): there are 10 such charges (totalling to 5000cr). Only 1 of them is BBB (CAPFLOAT FINANCIAL SERVICES PRIVATE LIMITED) Rest are all A+ or already paid back. We can see some merit in the statement of pristine pristine corporate loan book. These include many well known names like : IRB infra, JSL steel, credit access grameen, indigo airlines, tata power solar, reliance jio infratel, chemplast sanmar

Next steps would be to go lower down the charge curve between 100cr & 300cr charges: These are 131 charges so significantly more effort. Will do this over new few months.

Disc: This info is correct to the best of my knowledge & abilities. Do your own due diligence. Learn from the framework & apply on the bank of your choice. I am invested in IDFC & hence biased.

[retail]

with just 200 or 300 crore profit per quarter, one big corporate npa will wipe out all hard work done by bank

[Rushil_Shah]

Which one is the toll road account which slipped? The IRB toll?