I second that. VV has always maintained that IDFC first will have a mix of 75:25 retail to corporate loan book. Coporrate loan book can be in any form (WC lines, Guarantees (non funded), term loans, ODs, and other corporate requirement loans)
the major thing which VV is retracting from now is - the CI ratio - which use to be a standard target of 55% just 3 quarters back - he changed that to 60-65% last concall and this concall - he specifically mentioned 65% and extended the tenure to reach 65%. This in my opinion will not let us reach an RoE of 15% in a jiffy. we are going to see a painful time of fund raise (this time around its going to come from IDFC ltd, so we can still safeguard our interests) however, if ROE above 15% or above Teir 1 ratio is not achieved soon (more likely scenario because our CI is going to trend slowly towards 65% - who knows he will start saying target is 65-70%), we will continue to see further dilution and hence can stagnante the share price.
its prudent for VV to focus on fixing CI ratio by gradually moving away from DSA model and try to reduce CI aggressively, other wise i dont see value creation in longer run if ROE remains lower than teir 1 CAR.
Hope he achieves it.
Discl: invested in IDFC first through exposure in IDFC ltd.
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