Growth outlook: Management believes that 15%-20% growth is quite
managebale citing refinancing opportunities still available largely subsituting
mid- sized PSU banks (30%-40% of the growth from re-financing). Risk aversion
of PSU banks, consolidation of financiers and better funding rates are reasons
for IDFCs gain in market share in re-financing. Going ahead, IDFC believes, Roads
could offer some opportunities considering that bids by the developer have
become reasonbale as they face increasing scrutiny from financers.
Asset quality: Gas projects remain a concern: IDFC expects to limit GNPA to< 1%
even in these challenging conditions and IDFC already has +1.5% provisioning on
its books. The large concern remains under construction gas based projects (~2-
3%% of the book) wherein there could be some rescheduling, but they do not
expect NPV hits. IDFC’s has already provided Rs0.6bn for their Rs1.4bn Deccan
chronicle exposure and expects to write some more in coming qtrs. There have
been ~4-5 power projects that have either been recognised as NPA or promoters
face CBI charges and IDFC does not have any exposure to these SPVs.
Margins to be maintained in spite of high re‐financing share: IDFC has seen
improvement in spreads over last 2-3 qtrs and expects to maintain spreads in
spite of higher share of re-financing business where spreads are ~50-75bps
lower. Softness in wholesale rates and more importantly pricing power is aiding
IDFC’s margins in spite of higher re-financing business.
Capital market related businesses: Apart from its core lending business, the
company is focussing on its PE business wherein it plans to double the existing
AUM by adding ~$1.5 billion in the next two years through three new funds.
Prospects of other capital market business continues to remain challenging.
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