Re: {LONGTERMINVESTORS} IDFC: Thread
RAJESH DESAI
"IDFC continues to deliver robust NIMs on the back of effective ALM management. While there has been good pickup in loan momentum this quarter," Morgan Stanley said in a note.
In banking, asset and liability management (ALM)is the practice of managing risks that arise due to mismatches between the assets and liabilities (debts and assets) of the bank.
Analysts expect to gain further insights from the company's conference call with analysts that starts at 11.a.m
IDFC's net interest income (NII) rose 30% to Rs 629 crore in Q1 June 2012 over Q1 June 2011. NII from loans increased by 30% to Rs 555 crore in Q1 June 2012 over Q1 June 2011. NII from treasury operations increased by 35% to Rs 74 crore in Q1 June 2012 over Q1 June 2011.
Non interest income increased by 24% to Rs 137 crore in Q1 June 2012 over Q1 June 2011. Income from principal investments were at Rs 2 crore. Asset management fees increased by 3% to Rs 64 crore in Q1 June 2012 over Q1 June 2011. Investment banking and Institutional broking income decreased by 38% to Rs 9 crore in Q1 June 2012 over Q1 June 2011. Loan related and other fees increased by 78% to Rs 62 crore in Q1 June 2012 over Q1 June 2011.
The company's gross loan book increased 34% to Rs 50892 crore as on 30 June 2012 in Q1 June 2012 over Q1 June 2011. Gross approvals doubled to Rs 11,744 crore in Q1 June 2012, from Rs 5,799 crore in Q1 June 2011. Gross disbursements increased by 55% to Rs 4502 crore in Q1 June 2012 over Q1 June 2011. Cumulative outstanding approvals were at Rs 76,412 crore as on 30 June 2012.
Net non-performing assets (NPAs) were at 0.14% of outstanding loans as on 30 June 2012, higher than 0.10% as on 30 June 2011. The company's average assets under management (AUM) were at Rs 36472 crore.
IDFC provides infrastructure-financing services. It provides financing products and fee based services to infrastructure projects. The company also offers asset management services through IDFC Mutual Fund.
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CA. Rajesh Desai
RAJESH DESAI
For Q1FY13, IDFC remained on a healthy growth trajectory with strong asset growth (33.7% YoY loan growth to Rs50,157 cr) along with improved NIMs (4.4%), interest spreads (2.5%) and asset quality (NNPAs at 0.14%). NII grew 30.2% YoY and 7.3% QoQ to Rs629 cr. Non-interest income has gone up 24.5% YoY and 2.2% QoQ to Rs137 cr driven by higher fee income. Pre Provisioning profits have grown 33.6% YoY and 14.1% QoQ to Rs656 cr. Gross NPAs and Net NPAs remain negligible and were stable at 0.30% and 0.14% respectively. Provisions were comparatively higher at Rs103 cr on account of a one- time provisioning of Rs64 cr related to investment diminution. Reported PAT has gone up 21.1% YoY and 13.3% QoQ to Rs380 cr.
Concerns
- Inability to raise capital in future could impact growth
- Inherent risks in infrastructure financing
- Significant exposures to certain sectors like power (43% in Q1FY13)
- Foreign currency risk - 8% of loans borrowed are in foreign currency
- Discontinuation of tax benefits could affect profits
- Competitive and profitability pressures in the capital market related businesses
Outlook & Valuation
IDFC has been performing well in the last couple of years reflected in growing loan book size, interest income, disbursements and profits. Besides structural advantage over banks, it is also supported by good management which has expertise in infrastructure lending. This would help in keeping its loan book growth intact given the potential of infrastructure financing in India. A strong return on assets ratio of 2.47% as on June 2012, capital to support loan book growth, superior credit quality and high non-interest income contribution (~18 % of the revenues) are the key positives. IDFC's loan book grew at 27% CAGR over the period FY07-12. IDFC has a strong asset quality with gross NPA ratio of 30 bps of loans and ROE of 13.2%.
For Q1FY13, IDFC remained on healthy growth trajectory with strong asset growth (33.7% YoY loan growth to Rs50,157 cr) along with improved NIMs (4.4%), interest spreads (2.5%) and asset quality (NNPAs at 0.14%). NII grew 30.2% YoY and 7.3% QoQ to Rs629 cr. Non-interest income has gone up 24.5% YoY and 2.2% QoQ to Rs137 cr driven by higher fee income. Pre Provisioning profits have grown 33.6% YoY and 14.1% QoQ to Rs656 cr. Gross NPAs and Net NPAs remain negligible and were stable at 0.30% and 0.14% respectively. Provisions were comparatively higher at Rs103 cr on account of a one- time provisioning of Rs64 cr related to investment diminution. Reported PAT has gone up 21.1% YoY and 13.3% QoQ to Rs380 cr.
During FY13, management expects ~20% growth in loans with stable spreads. Refinancing is a large opportunity as the number of first generation projects that will look to refinance is high. Fall in cost of funds will help to grow in refinancing business without the sacrifice of spreads. With the definition of infrastructure sector being widened to include healthcare, pipelines etc. IDFC could look into tapping these sectors as well.
HDFC Securities is maintaining their FY13 estimates (though the components of topline may require a change – but the topline could remain the same). NPAs could continue to remain negligible and HDFC sec don’t expect much concern on this front. Exposure to power sector (43% of total) has increased only marginally and given recent positive sector developments, management is confident of earnings risks to be lower.
In their result update on IDFC dated May 18, 2012 HDFC Securities had mentioned, “IDFC could trade in the range of Rs105 - Rs137 (1.1x – 1.5xFY13E BV) for the next three months.” Post the report the stock has touched a low of Rs115.7 on 21h May 2012 and a high of Rs144.7 on 21st August 2012.
HDFC Securities feels fresh investors could look to buy the stock at CMP and add the stock on dips of Rs128 - Rs132 (1.4x-1.45x) for a target price of Rs151 (1.65x FY13E BV) over the next 1 quarter.
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CA. Rajesh Desai
RAJESH DESAI
-Khazanah-IDFC SPV to have equity base of Rs 890 crore
NSEI Block Deal: Infrastructure Develpoment Finance Company 378355 shares at 158.50 INR
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CA. Rajesh Desai
Rajesh Desai
Dear Sir/Madam,
IDFC Ltd announced its Q4FY13 result on 01st May 2013.
Company’s topline increased by 8.61% QoQ and 28.89% YoY to INR2217.51 crores. Whereas, bottom line increased by 15.52% QoQ and 57.01% YoY to INR525.7 crores.
During the quarter, company has improved its asset quality, GNPA & NNPA improved by 11 and 7bps QoQ while, 15 and 10bps YoY to 0.15% and 0.05% respectively. Moreover, company is well capitalized to support its growth trajectory. Capital Adequacy Ratio (CAR) stood at 22.10%.
In FY13, topline increased by 28.33% YoY to INR8138.59 crores. Whereas, bottom line increased by 18.16% YoY to INR1836.20 crores.
|
Q4FY13 (INR Crores) |
Consensus |
Actual |
Variance % |
Profit After Tax (PAT) | 470.00 |
525.7 |
11.85% |
|
Particulars |
Q4FY13 |
Q3FY13 |
Q4FY12 |
QoQ(%) |
YoY(%) |
FY13 |
FY12 |
YoY(%) |
Net Sales & other operating income | 2217.51 |
2041.66 |
1720.46 |
8.61% |
28.89% |
8138.59 |
6342.13 |
28.33% |
|
Operating Profit (Excluding OI & Finance Cost) |
1896.85 |
1856.49 |
1486.39 |
2.17% |
27.61% |
7259.53 |
5536.00 |
31.13% |
|
OPM(%) |
85.54% |
90.93% |
86.39% |
(539)bps |
(85)bps |
89.20% |
87.29% |
191bps |
|
PAT |
525.70 |
455.07 |
334.83 |
15.52% |
57.01% |
1836.20 |
1554.01 |
18.16% |
|
PAT(%) |
23.71% |
22.29% |
19.46% |
142bps |
425bps |
22.56% |
24.50% |
(194)bps |
|
Diluted EPS |
3.44 |
2.98 |
2.19 |
15.44% |
57.08% |
12.05 |
10.20 |
18.14% |
|
All data in Crores , EPS Represents Diluted EPS. | ||||||||
For the year ended March 31, 2013, the Board of Directors have recommended a dividend of INR2.60 per equity share.
Regards,
Team Microsec Research
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CA. Rajesh Desai
Rajesh Desai
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CA. Rajesh Desai