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IDFC (IDFC.BO)
Research Tactical Idea
We believe the share price will rise relative to the country index over the next 45 days.
We are Equal-weight on IDFC from a fundamental perspective given rich valuations (18.2x F2012e earnings and 2.5x BV).
However, we believe that the stock could perform well in the near term. Following the monetary policy announcement, we
believe that funding cost pressures for wholesale-funded institutions could be anchored. IDFC is likely to continue to
deliver strong volume growth in the coming quarters even as funding cost pressures stop intensifying -- this in our view
could be a catalyst for stock performance.
We estimate that there is about an 80%+ or "highly likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
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