Motilal Oswal's research report on IDFC
IDFC Limited (IDFC) reported lower operating profit of INR 5.5b for 3QFY17 compared to INR 8.6b in 2QFY17 (YoY comparison is not available). This was driven primarily by lower operating profit contribution from IDFC Bank. Increase in provisions due to spike in GNPL during the quarter drove lower PPoP at the bank.
OutlookThis would be partially offset by strong trading gains over the next few quarters. Increase in IDF leverage (leading to higher RoE), continued traction in asset-light businesses (Securities, Asset Management), and build-up of banking business will lead to value creation for shareholders. We use SOTP and roll over to FY19E to arrive at a target price of INR 86. Buy.
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