Stay invested in IDFC: Mayuresh Joshi

Mayuresh Joshi of Angel Broking told CNBC-TV18, "In IDFC the transition from a financial institution to a bank has its own pros and corns. With the kind of forbearances that we probably seen at 30 percent, it was much lower than what the street was expecting. It releases Rs 12,000 crore odd and again the 15 percent exemption that one probably gets on its books ensures that the growth momentum or the triggers for the stock remain very much in place."

"Looking at the kind of activity that IDFC has probably undergone over the past two quarters, it is on a conscious basis reduced its sanctions and disbursements more or less to reduce transitionary cost of converting to a bank. With the kind of increases that one probably expects both in terms of operating expenses going up and the management was also clear that the credit cost will start inching higher and the cost to income ratio should start hitting that 30-30 percent plus kind of figures one the transition happens," he added.

"From a long-term perspective the returns would start accruing to IDFC as the bank. From a short-term perspective for the next year and the half or couple of years, the spike up in opex costs will clearly ensure that the return ratios remain subdued. So time horizon is more than the couple of years, the investors are well advised to hold on to the stock."

"If it is anything less than a couple of years the other financial plays something like an Axis Bank, HDFC Bank on declines look far superior in terms of returns more or less to do with structural rate cuts which reduces their cost of funds. Clearly with the earning cycle returning, these stocks may perform better over the next couple of years," he said.