IDFC Bank Limited is a banking company. The Bank’s segments include treasury, corporate/wholesale banking, retail banking and unallocated.
Sector – Banks
Company Background And Business Mode
- M.Cap (Cr) 19,915
- 52 Week H/L 54.55/32.7
- NSE Code IDFCFIRSTB
- BSE Code 539437
IDFC Bank possessed strong systems and processes, efficient treasury management system, strong presence in corporate and infrastructure financing, payment systems and over 34L customers. On the other hand, Capital First possessed a strong retail franchise in niche segments with strong credit skills, consistently delivered increasing profitability and ROE, high asset quality and a customer base of over 7mn and 4mn live customers. The merged entity, IDFC First Bank, will possess a strong loan asset base of more than Z104,000Cr, of which 34% is in the retail segment, diversified asset profile, strong platform to grow retail deposits and CASA and a large retail customer base of more than 70L live customers including 30L rural customers.
The strategy going forward as envisaged by the management is as follows:
- Asset Strategy — The strategy on growth of assets, diversification of assets and gross yield expansion is as follows:
1) Growth of Assets — The Bank plans to grow the retail asset book from Z36,236Cr to over Z100,000Cr in the next 5-6 years, reduce the loans to infrastructure segment as they mature and continue to grow the non-infra corporate loan book.
2) Diversification of Assets — Currently, retail book contributes to 35% of the total funded assets. The Bank plans to increase the retail book composition to more than 70% in the next 5-6 years.
3) Gross Yield Expansion — As a result of increasing retail book in the loan book pie, the gross yield of the bank’s loan book is planned to increase from 9.2% to ,-,42% in the next 5-6 years.
- Liability strategy— The strategy on growth of CASA, diversification of liability and branch expansion is as follows:
1) CASA growth — The key focus of the bank would be to increase the CASA ratio from 10.3% currently to —30% within the next 5-6 years, as well as to set a trajectory to reach a CASA ratio of 40-50% there on.
2) Diversification of Liability — As a percentage of the total borrowing, the retail term deposits and CASA is proposed to increase from 10.5% currently to >50% in the next 5-6 years and set a trajectory to reach 75% thereafter.
3) Branch Expansion — In order to grow retail deposits and CASA, the bank plans to set up 600-700 more branches in the next 5-6 years from the current branch count of 206.
- Profitability strategy – The strategy on Net Interest Margin, Cost to Income Ratio and RoA and RoE is as follows:
1) Net Interest Margin – The Bank has envisaged to expand NIM to about 5.5% in the next 5-6 years.
2) Cost to Income Ratio – The Bank plans to improve C:I ratio to ~50-55% over the next 5-6 years, down from ~79% currently
3) RoA and RoE – The bank aims to reach a RoA in the range of 1.4% to 1.6% and RoE of 13-15% over the next 5-6 years.
ValuationsAt CMP of 41.65, IDFC First Bank is trading at P/B of 0.87 on FY19E basis as per Bloomberg consensus estimates. Given the aggressive strategies laid out by the management as envisaged above to transform the bank and attractive valuations, we are POSITIVE on IDFC First Bank
- Market Cap: 21,517 Cr.
- Current Price: 45.00
- 52 weeks High / Low 54.55 / 32.70
- Book Value: 31.91
- Stock P/E: 23.51
- Dividend Yield: 1.19 %
- ROCE: 7.23 %
- ROE: 5.75 %
- Sales Growth (3Yrs): %
- Listed on BSE and NSE
- Company Website
- Face Value: 10.00
Peer Comparison Sector: Banks // Industry: Banks – Private Sector
|S.No.||Name||CMP Rs.||P/E||Mar Cap Rs.Cr.||Div Yld %||NP Qtr Rs.Cr.||Qtr Profit Var %||Sales Qtr Rs.Cr.||Qtr Sales Var %||ROCE %|
|2.||Kotak Mah. Bank||1301.55||36.12||248340.17||0.05||1844.01||20.70||7744.58||21.18||7.93|
|8.||IDFC First Bank||45.00||23.51||21516.85||1.19||-1538.01||626.40||3664.08||60.44||7.23|
- Payment of Interest Feb. 11, 2019
- IDFC FIRST Bank Limited – Commentary On The Q3 FY 19 Financial Results Feb. 7, 2019
- Announcement under Regulation 30 (LODR)-Investor Presentation Feb. 5, 2019
- Announcement under Regulation 30 (LODR)-Analyst / Investor Meet – Intimation Feb. 5, 2019
- IDFC FIRST Bank Limited – Outcome Of Board Meeting Held On February 05, 2019_Financial Results – December 31, 2018 Feb. 5, 2019
- Commercial Paper programme of erstwhile Capital First Limited and Capital First Home Finance Limited transferred to IDFC Bank Limited post merger icra
- IDFC Bank Limited: [ICRA]A1+ assigned for enhanced Certificate of Deposit programme icra
- IDFC Bank Limited: Long-term rating downgraded to [ICRA]AA+; Short-term rating reaffirmed icra
- India Ratings Downgrades IDFC Bank’s Senior Debt to ‘IND AA+’/Stable; Off RWN fitch
- IDFC Bank Limited: Ratings assigned to enhanced Certificate of Deposits Programme icra
- IDFC Bank Limited: Ratings reaffirmed icra
- India Ratings Maintains IDFC Bank’s Senior Debt on RWN fitch
- IDFC Bank Limited: Update on Material Event icra
- India Ratings Places IDFC Bank’s Senior Debt on RWN fitch
- Update on the IDFC and Shriram Capital Group announcement icra
- ICRA takes note of the proposed merger between IDFC group and Shriram Capital Group entities icra
- India Ratings Places IDFC Bank’s Senior Debt on RWE fitch
- ICRA assigns [ICRA]A1+ rating to the enhanced Certificate of Deposit programme of IDFC Bank Limited icra
- India Ratings Affirms IDFC Bank’s Senior Debt at ‘IND AAA’; Outlook Stable fitch
- ICRA reaffirms the ratings of [ICRA]AAA(Stable)/[ICRA]A1+ to the debt programmes of IDFC Bank Limited icra
- ICRA assigns rating of [ICRA]A1+ for the enhanced Certificate of Deposits programme of IDFC Bank Limited icra
- India Ratings Assigns IDFC Bank’s Senior Debt Final ‘IND AAA’; Outlook Stable fitch
- ICRA assigns rating of [ICRA]AAA(stable) for NCD programme and [ICRA]A1+ for Certificate of Deposit Programme of IDFC Bank Limited icra
- India Ratings Assigns IDFC Bank`s Senior Debt`Provisional IND AAA`;Outlook Stable fitch