IDFC F1Q12: In-Line Numbers, Volume Growth Decelerates ::Morgan Stanley Research,

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IDFC
F1Q12: In-Line Numbers,
Volume Growth Decelerates
Quick Comment – IDFC reported a profit of Rs3.1 bn
(+9% QoQ, -6% YoY), broadly in line with
expectations. Loan growth, which decelerated to
30% YoY (flat QoQ) is likely to see further
moderation ahead, given the adverse policy
environment. The stock is trading at 13.7x F12e P/E,
1.7x F12e PBV.
The key highlights from the results include:
a) Volume growth decelerated: Infra loan book grew
by 30% YoY and was flat QoQ; this compares with 7%
QoQ / 50% YoY delivered in the previous quarter.
Gross disbursements and sanctions were both down
50% YoY. On a sequential basis, gross disbursements
were down 30% QoQ; sanctions were up 9% QoQ.
Undisbursed sanctions (i.e., pipeline of loans) grew by
2% YoY and 16% QoQ. The sequential growth was
driven by the telecom segment.
b) Margins were stable sequentially: Margins on
infrastructure loans (on our computations) were stable
sequentially. Adj. NII on infra loans was up 3% QoQ and
was up 35% YoY.
c) Non-interest income trends were weak (-17% YoY
and -9% QoQ, excluding cap gains/carry income): Infra
loan fees were down 16% YoY but were up 15% QoQ.
While loan activity was weak – there was a pick-up in the
non-funded exposures (up 52% QoQ / 175% YoY),
which may have supported fees this quarter.
Asset management fees were down 6% YoY (-3% QoQ).
No carry income was booked this quarter (vs. Rs240 mn
in previous quarter). Investment banking / brokerage
business revenues were down 47% YoY and 50% QoQ.
IDFC recorded an investment MTM loss of Rs20 mn (vs.
a profit of Rs290 mn in the previous quarter).