IDFC (IDFC IN; Mkt Cap USD7.2b, CMP Rs219, Buy); Manish Karwa
n IDFC posted 77% increase in consolidated earnings to Rs2.18b in 3QFY08 on the back of strong volume growth, stable spreads, and higher capital gains and fees. NII on infrastructure loans was up 44% YoY to Rs1.5b. NII from treasury operations was up 123% YoY to Rs290m.
n Fee income grew 364% YoY due to consolidation of SSKI as well as strong growth in advisory fees. Excluding SSKI (Rs565m in 3QFY08), fee income growth was strong at 146% YoY. Capital gains increased from Rs290m in 3QFY07 to Rs730m in 3QFY08.
n Balance sheet grew 58% YoY to Rs259b, driven by 43% growth in loans and a huge build up of treasury and investment portfolio. Gross disbursements increased 53% YoY to Rs84b in 9MFY08. Approvals increased 60% YoY to Rs149b in 9MFY08. Thus, disbursements and loan book growth will remain strong going forward.
n While RoA has declined YoY, the decline has been on account of higher taxes. Effective tax rate has increased from 19% in 3QFY07 to 26% in 3QFY08 (12m rolling). IDFC reported RoA of 3.2% in 3QFY08 (12m rolling), as against 3.2% in 2QFY08 and 3.3% in FY07. RoE has increased to 16.6% despite the capital raising of Rs21b in 2QFY08. Asset quality remains strong with zero net NPAs.
n We have revised our earnings estimates upward by11% for FY08 and 16% for FY09 to factor in strong traction in asset growth as well as fee income. The stock currently trades at 21.3x FY10E EPS and 3.6x FY10E BV. Buy.
No comments:
Post a Comment