IDFC Bank from IDFC, valuation and future earnings.

@ sachin pathak hit a bulls eye here.... Lonewolf amongst the many optimistic members on IDFC when suggesting that IDFC isnt to be invested in and its better to adopt a wait and watch approach on this one

 

I would beg to differ - IDFC doesnt have any unique offering which differentiates it from the rest and well established players. Please do correct me if i miss something

 

Darth, The differentiated business model comes from two directions :

1. Lowest cost / income ratio in the industry. The plan is to be 30% lower than industry. This again, is a consequence of various actions taken at the operating and ground level.

2. Changing the level of technology interface used in dealing with customers. Urban customers will be offered only a pure online banking solution.

Again, let me emphasise that wholesale banking will be the key driver and the mix will change enough to make a difference only over two to three years. A lot of my conviction comes from the team and what they have done with IDFC. But this is a loooong term bet where one needs to understand that benefits will start playing out significantly if one buys at regular intervals esp when the conviction in the market is low. In no way is this to be read as as scorching multibagger in a few months. This will be a wealth generator over multiple years and will benefit only those with a certain style of investing.

 

Is it not better to go for definite gains stocks like Heritage, Gati, TCI (value unlocking), JB Chem instead of such stocks?

 

Good statement

 

Hi, good to note the conviction in the team at the helm of affairs. Its a reasonably good set though i doubt they will create another Indusind even over the longer term.

The differenting pillars you mention - are they indeed so? Best is to watch how these span out in the coming quarters

I have just put in on my watchlist. I think it could head lower.

Btw maybe Bank of Internet may interest you

 

It is a matter of allocation and timeframes for allocations. The other reason I like IDFC bank is they have a strong balance sheet. The weak balance sheet of many banks will create a realignment over the next few years. JB and Gati and Heritage are good stocks as well

 

Now that the bank has declared results for 2 qtrs, what is the opinion of every one about its prospects?

 

Hold for those who are already invested.

 

Not a bullish 'buy'. Isnt IDFC Bank one other 100x stock? At 47/- and in the hands of an A-Team, should be ready for take-off?

 

I have never been prisoner of past.Wind will never change as per our wish ,only we can change our stretagy. Dear @Sachin pathak @darth were right on not sharing my bullishness.But definitely stock is now more attractive at lower levels and can give good returns in long run ,three to five years .But I am now more skewed and selective ,bullish on retail Banks like HDFC bank,Yes bank,Kotak bank ,Indusind bank and DCB Bank Although I still hold many more private banks in addition to mentioned above,but fresh money will go in five Banks mentioned above on corrections.I don't like fluctuations in performance .I prefer steady growth over value and performance fluctuations.I don't like too much churning of my portfolio.

 

Oh yes the scrip is at a lot more realistic valuations now. And its not my technical knowledge of banking that makes me say this. Good choice - the names you mention except ofcourse DCB. Cant mention DCB in the same breath as HDFC, Indusind, Yes and Kotak. I hold only these four as core with SBI being a recent addition.

 

What is the current book value of IDFC Bank? Values are different on different websites.

 

Very important saying.

Five Bank stocks in portfolio of same mcap? Is it not repetition of stocks and over-diversification?

 

Repittion or over diversification : not really. Each were invested into with a specific intention and basis. Exit : time frame and/or event also charted out.

 

Good strategy.

 

IDFC rallies 14%: Will it benefit from bank licence rules?

Shares of IDFC rallied over 14 percent in trade after the Reserve Bank of India yesterday published draft guidelines for on-tap banking licences, which may do away with the need for the bank holding company structure.

Read more at: https://www.moneycontrol.com/news/market-outlook/idfc-rallies-14-will-it-benefitbank-licence-rules_6556901.html

 

IDFC Bank, parent merger on cards

The draft guidelines on on-tap banking licences will help IDFC Bank, the country's newest bank, to merge with its parent to create a bigger entity.

Rajiv Lall, founder, managing director and chief executive IDFC Bank, told Business Standard the easing of the rules would make it possible to integrate IDFC and IDFC Bank. Asked if the new rules could be applied retrospectively, Lall said they should be to create a level-playing field.

New converting entities that do not have any other group entities do not need to have a non-operative financial holding company (NOFHC) structure. Also, individual promoters or the standalone promoting company are not required to take the NOFHC route, according to the guidelines issued by the Reserve Bank of India on Thursday.

IDFC has a NOFHC for the demerged IDFC Bank and other subsidiaries, IDFC Mutual Fund, IDFC Alternatives, IDFC Infrastructure Fund and IDFC Securities. However, if the rules in the draft guidelines apply to existing banks, this structure can be collapsed, Lall said.

​

Markets were enthused by such a possibility. The IDFC stock was up 11.69 per cent to Rs 46.80 on the BSE and the IDFC Bank stock rose 2.25 per cent. IDFC Bank, along with Bandhan Bank, was granted a licence for universal banking in 2014.

However, analysts said IDFC would have to sell some of its shareholding in the other subsidiaries before the merger. "The draft guidelines allow the bank to have a subsidiary or joint venture or associate, but that will mean some tweaking in shareholdings," said an analyst, requesting anonymity.

IDFC Bank reported a 32 per cent quarter-on-quarter fall in its net profit to Rs 165 crore for the three months to March on a drop in total income and increased expenditure. IDFC reported dismal earnings with a consolidated net profit of Rs 130.45 crore for the March quarter. Standalone, IDFC reported a net profit of Rs 4.8 crore during the quarter.

The banking regulator, in its effort to keep the banking sector at a comfortable distance from corporate houses, has limited their presence in the draft guidelines to not more than 10 per cent. The most likely candidates to be granted banking licences in future will be non-banking financial companies (NBFCs).

Just a day after the draft guidelines were announced several NBFCs, including Muthoot Finance, IFCI and UAE Exchange were mulling applying for licences. "The initial draft looks promising and we are waiting for the final guidelines. We will definitely apply under this new scheme," said George Alexander Muthoot, managing director, Muthoot Finance. IFCI executives said it would be interested to apply because the cost of funds for NBFCs was high and capital adequacy norms were becoming stringent. Sanjiv Bajaj, managing director, Bajaj Finserv said as to qualify the lender must look at the total assets of the group and numbers for the latest financial year were not available yet, it would evaluate the option in the coming weeks.

https://www.business-standard.com/a...nk-parent-merger-on-cards-116050700041_1.html

 

Can you elaborate what you are trying to articulate

 

@wild_hipman: Is it time to book a loss & get out of Idfc & Idfc Bank both? If yes, then should l hold the cash or switch? Can be any sector. Thanks.