Hold IDFC; target of Rs 155: ICICIdirect.com

ICICIdirect.com has recommended hold rating on IDFC with a target of Rs 155 in its October 29, 2012 research report.

“IDFC, loan book grew 35% YoY and telecom sector saw highest growth in the same. We believe too much of refinancing based growth may not be sustainable and factor 22% growth in loan book. Of the total outstanding disbursement, energy constitutes 42% while transport and telecom constitute 22% and 24% (up from 22%). After taking a hit of Rs 50 crore on a media company in Q1, no fresh additions seen now. Asset quality remained stable with GNPA remaining flat sequentially in absolute terms at Rs 150.3 crore (0.3% of loan book).”

“IDFC has maintained profit growth of 15-25% in last 5 years even in slow economic conditions managing well between NII and non interest income. Spreads rising to 2.58% is well in expected 2.3% to 2.5% range. We expect loan book to grow at 22% in both FY13E and FY14E to Rs 72376 crore and reported NIM of 4.3%. We maintain PAT CAGR of 16.8% to Rs 2114.1 crore, over FY12-14E. Management indicated new green field projects in infrastructure are seeing an uptick in demand.”

“Even though its asset quality has remained stable at 0.2% NNPA, high exposure to segments like Energy and telecom to remain an overhang. Improving leverage (4.3x in Q1FY12 to 5.3x in Q2FY13) to be RoE accretive. With market sentiments recovering, capital market based subsidiaries to deliver better returns. We value IDFC’s core business at 1.4x FY14E ABV and on SOTP basis raise TP to Rs 155 from Rs 140. Maintain hold rating,” says ICICIdirect.com research report.

FIIs holding more than 30% in Indian cos

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