IDFC First Bank Limited

Below expectation results of IDFC First Bank.

Key concern is about declining QoQ PAT, consol PAT of Q3 is 732 Cr against 747 Cr in Q2. Please note Q1 PAT was also 732 Cr, indicating no PAT growth in 2 quarters on diluted equity. This is despite 280 bps lower tax rate this quarter. Q2 consol Tax rate is 24.0% against 21.2% this quarter. At same rate PAT would have been 707 Cr, much lower than Q1. Haven’t seen such lower tax rate among peers, can lead to adjustment in upcoming quarter. I wanted to ask this question in Concal, was not given this opportunity (happens with Individual Investors), shall write to the company.

Key concern is the high Cost to Income ratio, despite opening lesser # of branches this quarter (35 in Q3 against usual 50) this ratio at 73% is high. Seems fear of some analysts of over spending on brand building is playing right.

With Book value of Rs. 44.51, bank is currently trading at PB of 1.97, while IndusInd bank with better numbers is at 2,09. Seems that Mr. Market shall review the valuation.

Disc. Invested & reviewing.