IDFC First Bank Limited

Disc: No investments

IDFC First’s latest quarterly results illustrate (again) that need to be cautious in analyzing earnings growth (or decline) without taking the corresponding “equity inflation” into account (post #1861 above – IDFC First Bank Limited – #1861 by diffsoft )., esp in a growing bank!

1. IDFC First’s Earnings seemed to have grown quite well in the past year

   

2. But so too has its share count, which has grown by a staggering 13.3% over the past year!
   

3. And that gives a very sobering assessment on how much every share earned. The decline in earnings growth q-o-q has doubled and just snailed ahead y-o-y, much worse than a fixed deposit investor in the same bank!!!

   

4. You may workout for yourself how the impact would be on diluted shares

Notes:

1. An estimated reduction in share count from the impending merger of IDFC (from 264.64 cr to 248 cr) will make no difference to the conclusion.

2. I just took standalone earnings because the two other entities on consolidated earnings are quite immaterial.