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Infrastructure Development Finance Co. (IDFC.BO) Rs147.45
Equity Research
First Take: Below expectations on lower NII, capital gains
News
IDFC reported net profit of Rs3.21 bn (18% yoy growth), 18% below GS and
6% below Bloomberg consensus estimates on lower NII and capital gains.
Key highlights: (1) Net fund-based income grew only 6% yoy, 18% below
GSe as IDFC’s 12-m rolling spread improvement (+20bps qoq) was offset
by lower gains booked (only Rs200 mn gains vs Rs1.1 bn in 3QFY10), (2)
Loan growth was strong at 46% yoy but disbursements for the quarter
came in Rs51.3bn 27% below GSe and half of 2QFY11. Loan disbursements
tend to be bulky in project lending business and are not consistent across
quarters. Telecom exposure declined 29% qoq likely due to pre-payments
of loans on increasing competition. (3) Salary costs rose 57% yoy (28%
ahead of GSe) likely on bonus provisions, while Other expenses declined
by 21% yoy (4) Fee income grew 51% yoy (3% below GSe) as higher
brokerage income was offset by lower investment banking and fees on
AMC (5) Provisions increased just 15% yoy (7% below GSe) likely due to
lower disbursement figure reported.
Analysis
Likely quarterly aberrations were reflected in fall in margin in 2QFY11,
which has now corrected in 3QFY11, though down vs. peak. We believe
margins will likely remain under pressure in FY2012 given the significant
increase in interest rates for financiers. Given the competitive environment
and the slowdown which some of the capital goods and infrastructure
companies are now seeing, it is possible that disbursements trajectory may
not be too strong in FY2012 as has been the case so far.
Implications
We place our estimates, target price and rating under review pending the
earning conference call on Wednesday, Feb 2.
India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
Infrastructure Development Finance Co. (IDFC.BO) Rs147.45
Equity Research
First Take: Below expectations on lower NII, capital gains
News
IDFC reported net profit of Rs3.21 bn (18% yoy growth), 18% below GS and
6% below Bloomberg consensus estimates on lower NII and capital gains.
Key highlights: (1) Net fund-based income grew only 6% yoy, 18% below
GSe as IDFC’s 12-m rolling spread improvement (+20bps qoq) was offset
by lower gains booked (only Rs200 mn gains vs Rs1.1 bn in 3QFY10), (2)
Loan growth was strong at 46% yoy but disbursements for the quarter
came in Rs51.3bn 27% below GSe and half of 2QFY11. Loan disbursements
tend to be bulky in project lending business and are not consistent across
quarters. Telecom exposure declined 29% qoq likely due to pre-payments
of loans on increasing competition. (3) Salary costs rose 57% yoy (28%
ahead of GSe) likely on bonus provisions, while Other expenses declined
by 21% yoy (4) Fee income grew 51% yoy (3% below GSe) as higher
brokerage income was offset by lower investment banking and fees on
AMC (5) Provisions increased just 15% yoy (7% below GSe) likely due to
lower disbursement figure reported.
Analysis
Likely quarterly aberrations were reflected in fall in margin in 2QFY11,
which has now corrected in 3QFY11, though down vs. peak. We believe
margins will likely remain under pressure in FY2012 given the significant
increase in interest rates for financiers. Given the competitive environment
and the slowdown which some of the capital goods and infrastructure
companies are now seeing, it is possible that disbursements trajectory may
not be too strong in FY2012 as has been the case so far.
Implications
We place our estimates, target price and rating under review pending the
earning conference call on Wednesday, Feb 2.
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