IDFC Bank from IDFC, valuation and future earnings.

If it does, its gonna be initial euphoria because of high expectations and this is precisely the reason why i prefer to wait and watch. Never buy into high expectations for actuals usually only disappoint then. So greater chances of this premium fading away.

And yes what i missed saying before is that monies invested in indusind and yes arent recent.

Indusind i hope will soon enter into my 10x category (had bought it following the management change based on my implicit confidence in the team which moved as senior management and my advice will be to exit the day there are changes to this team)

 

First of all, my congratulations on your 10 bagger. Always good to have one in the portfolio. The IDFC bank team is a truly outstanding one. But then, to each his own. My view is it is a good bet for the future.

 

Whenever new Bank start ,it start with branches and business in profitable territory and cities. These are always better,as you go on expanding you ends up serving the non profitable last leg.So established Banks has already milked the profitable business and now expanding to rural and semiurban areas with competitively less profit.So growth looks always high in start due to low base.

 

You know something ..... You have just addressed this to a banker of 20years plus experience and i can only laugh at what you just said.

My apologies in advance for being so blunt and which borders on being rude.

 

Pl We need to discuss in a healthy way.

 

" It will open 15 branches in Madhya Pradesh and 1 branch each in Mumbai, Delhi, Ahmedabad, Hyderabad, Kolkata, Chennai and Bangalore. So 23 to start with and double over the year.

15 branches in Madhya Pradesh. So look up their Madhya Pradesh focus and strategy

 

Dear Sachin I am not inexperienced one.But no harm in difference of opinion.

 

Dont feel offended... For those werent my intentions but what you say borders on stupidity. Good for you if many bankers of repute need to take an appointment to meet you Mr Bigfella.

But my friend, thats a lot different from having had the previlege of having worked with over 20years with bankers of great repute and knowing the inside out of banking industry and importantly how difficult is it to make money as a bank in India

 

Guys, stop it. This is a forum for exchanging constructive ideas in good spirit. Sachin, kindly participate in a constructive manner so people can benefit from the experience you say you have.

 

I hope it is too and at the signs of this opportunity showing i will be the first to jump in and buy. But for now my view still remains...... 1) not invest into any initial euphoria which seems to be the case around the new setup or maybe its the case only on this forum here 2) have it on your watchlist given its earlier strong execution capabilities to see if they are able to similarly execute for a bank now 3) start investing when the stock begins pricing both - execution and real expectations

 

My threads were very clear... About wait and watch supported by clear indicators that its a banker which is behind the threads. Now if people wish to argue for the sake of arguing (with irrational submissions) to promote their position then surely one has to put an end to it somehow....

 

Sachin : the book value of IDFC bank will be Inr 40. All holders of IDFC got allotted 1 share of IDFC bank yesterday. It's balance sheet size will be 75k crores and loan book around 55k. It will continue to offer infra loans, enter wholesale banking ( commonality of client base) and look at retail and rural banking as the other two legs. They have some interesting ideas on technology and net based banking. It will be predominantly infra and wholesale led for sometime. The expected b/s in five years time is 150000 crores. If Rajiv Lall says this, I trust him. He laid out the IDFC bank vision a good five years back. I have tracked IDFC closely over a decade and can confidently say one thing : they are a superb team. If anything, I am surprised that there is so less excitement around this opportunity. Multi bagger or not, this is one wealth creation story that is not going away in a hurry. And this is based not on euphoria but on solid and close tracking over many years.

 

I expect idfc bank to start quoting between inr 60 to inr 80.

 

Useful information. Thanks. Will come in handy in my tracking

 

Very strange ,the person who never tracked,IDFC,did not know its scheme to set up Bank and list the bank till yesterday evening,did not know top banker Mr.Lal,become experienced ,knowldge banking guru and seasoned banker with in one day with 20 year experience and start laughing at me and useing words like stupid for me.I have no complain Dear Sachin,Let people decide.Ye Public hai,Sab Janti hai.I don't want to argu with you Dear Sachin.

 

The contrasting views of @kharb and @Sachin pathak are both very interesting and useful. We need the viewpoints of experienced investors to shape our own thinking.

 

Expected valuation of IDFC Bank, IDFC Holding Company

The erstwhile IDFC Ltd infra business traded at valuation of 1.5-1.6x of BV. However, with the banking entity separation, the bank can trade at a higher multiple. The bank's book value in FY16E post factoring in | 1600 crore of adjustment (net of tax benefit from | 2500 crore permitted reduction) for provisions for stressed book, is expected at to be ~| 39.4 and is further seen growing at 10.1% CAGR to | 56.5 by FY20E.

The networth from IDFC Ltd to IDFC Bank is | 13300 crore and should grow to | 19110 crore in FY20E.

With return ratios of the bank expected around 8.3% for RoE and 1.2% for RoA by FY18E, the bank can command 2.5-3x multiple on estimated BV on listing. We value the standalone bank at 2.5x FY17E BV. As we have factored in adjustment in networth for the stressed book providing 50-60% of the stress, the standalone bank target value per share is Rs. 107/share. Listing of bank can be around | 80-90 per share.

As the holding company will own all other businesses including 53% stake in the bank, we value the company providing 15% discount to respective subsidiary valuations. Accordingly, we assign a value of | 79 per share for the IDFC Holding Company.

Hence, the target price for existing shareholder is | 79 for the holding company and | 107 for IDFC Bank (yet to be listed). We are more positive on the prospects of IDFC Bank compared to the holding company.

 

Mr Lal and top banker.... Reflects your shallowness and lack of the indian banking industry or did you inadvertently get the gender wrong? The only Lal in the banking world who mattered was a Mrs Lal and not a Mr Lal. Its a waste of time interacting with you because of your dramabazi 'public hai, sab janti hai' roar..... How full of ignorance. You dont even know that the Public does not know anything worthwhile.

I challenge you to share your real profile and i will mine.... And you and this illusionary all knowing public will see whether i am a 20yr + banker or no

 

Please calm down. What is this way of interacting? Do differences of view have to degenerate into name-calling? I would request you to take a break and come back later. Your contributions are valuable but this kind of outburst is not in good taste.