IDFC First Bank Limited

@Gurvinder_Singh @Ragnar_Danneskjold
I feel valuations is very subjective and every investor has a different style while valuing a company. In my opinion we should be valuing a company on bad to average future performance. If we value on the best possible assumptions then it is going to be kind of risky.

I mentioned in my last point that even if I am wrong at one part the other part will balance off. Like if I take a profit of 4500cr in FY25 then the money raised at 100rs has a probability of only 5%. So the total dilution instead of 820cr will be 1020cr at 50rs. So 4.41 EPS and PE of 30 gives a price of 130. Again I am taking 30 as PE.

Now if IDFC is growing at 2x compared to industry in future and we are going to expect it will maintain same asset quality even at such high growth then that is also going to be risky.

IDFC has a provision coverage of 73% including technical write off at IndusInd size it will need to take it above 80% this is also going to eat profits.

My point is that we should not be projecting linear growth especially in banks because there is always uncertainty in future and I feel as of today above 60 is expensive.

Now as new quarterly performance comes in and it is better than most of my assumptions then I can increase my targets accordingly.

I feel most of the assumptions taken by me are pretty good and chances of bank outperforming all of those looks difficult as of today.