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    Wealth Management Assignment Idfc: About The Company

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    Manmeet Malik
    IDFC is India's leading infrastructure finance company that provides financing and advisory services. Its future prospects are tied to growth in India's infrastructure sector, which the government aims to invest $1 trillion in over five years. While project finance offers low returns, IDFC has diversified into related higher-return businesses like investment banking and asset management. Key risks include policy uncertainty and increasing competition. Historically IDFC has grown its income, earnings per share, and book value per share significantly. Given India's growth outlook and IDFC's past performance, the analyst recommends buying the stock.

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    Wealth Management Assignment Idfc: About The Company

    Uploaded by

    Manmeet Malik
    26 views2 pages
    IDFC is India's leading infrastructure finance company that provides financing and advisory services. Its future prospects are tied to growth in India's infrastructure sector, which the government aims to invest $1 trillion in over five years. While project finance offers low returns, IDFC has diversified into related higher-return businesses like investment banking and asset management. Key risks include policy uncertainty and increasing competition. Historically IDFC has grown its income, earnings per share, and book value per share significantly. Given India's growth outlook and IDFC's past performance, the analyst recommends buying the stock.

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    stock analysis IDFC

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    Manmeet 1223

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    IDFC is India's leading infrastructure finance company that provides financing and advisory services. Its future prospects are tied to growth in India's infrastructure sector, which the government aims to invest $1 trillion in over five years. While project finance offers low returns, IDFC has diversified into related higher-return businesses like investment banking and asset management. Key risks include policy uncertainty and increasing competition. Historically IDFC has grown its income, earnings per share, and book value per share significantly. Given India's growth outlook and IDFC's past performance, the analyst recommends buying the stock.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views2 pages

    Wealth Management Assignment Idfc: About The Company

    Uploaded by

    Manmeet Malik
    IDFC is India's leading infrastructure finance company that provides financing and advisory services. Its future prospects are tied to growth in India's infrastructure sector, which the government aims to invest $1 trillion in over five years. While project finance offers low returns, IDFC has diversified into related higher-return businesses like investment banking and asset management. Key risks include policy uncertainty and increasing competition. Historically IDFC has grown its income, earnings per share, and book value per share significantly. Given India's growth outlook and IDFC's past performance, the analyst recommends buying the stock.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Wealth management assignment IDFC

    About the company:


    Infrastructure Development Finance Company Ltd (IDFC) was set up in 1997 and is currently India's leading integrated infrastructure finance player providing end to end infrastructure financing and project implementation services. The company's main business is to provide finance for infrastructure projects including through ownership of infrastructure assets. They operate a full range of business lines, from project and corporate finance to asset management (mutual funds and alternatives) and investment banking. They are engaged in providing finance and advisory services for infrastructure projects, asset management and investment banking.

    Future prospects:
    IDFCs future prospects are linked with the outlook of the Infrastructure sector. Indias infrastructure sector is one of the fastest growing sectors in the World. With the Indian economy on a high growth path on a secular long term basis and with the Governments initiatives towards infrastructure development, Indian infrastructure sector is expected to have significant growth opportunities. The Government has a goal of investing $ 1 trillion in infrastructure over the next five years. IDFC works closely with government entities and regulators to advise and assist them in formulating policy and regulatory frameworks that support private investment and public-private partnerships in infrastructure development. In the next five years, the loan demand from infrastructure projects is expected at $ 600-800 bn and the company is thinking of financing $ 10 bn, keeping its healthy assets quality intact.

    Key Concerns:
    Project finance is very capital-intensive and offers a low ROE. So, the Company diversified in the related-business - investment banking, advisory business and a private and public asset management business, which requires minimal capital and where it can maintain high ROE.

    Policy uncertainties relating to land acquisition, input linkages, tariff-setting, etc. Increasing competition with banks and other NBFCs. Policy rate hikes of 250-300 basis points by the RBI to control inflation, in the last 1.5 years, is impacting loan demand and increasing cost of funds.

    Key statistics:
    Particulars Operating Income (Rs. Cr.) Y-o-Y Gr. Rt. Adjusted EPS (Rs.) Y-o-Y Gr. Rt. Book Value per Share (Rs.) Y-o-Y Gr. Rt. Mar'07 1,566 51.4% 4.48 28.7% 26.17 14.4% Mar'08 2,795 78.5% 5.73 27.9% 43.19 65% Mar'09 3,626 29.7% 5.79 1.1% 47.56 10.1% Mar'10 4,033 11.2% 8.17 41.1% 53.74 13% Mar'11 4,916 21.9% 8.55 4.7% 71 32.1% Mar'12 6,342 29% 9.99 16.8% 81.01 14.1% Mar'13 8,139 28.3% 12.12 21.3% 90.14 11.3%

    Analysis:
    IDFC, in the last 10 years, increased its operating income by 31% on a stand-alone basis, from Rs. 401 Cr. in FY02 to Rs. 4546 Cr. in FY11. During the same period of time, its EPS has grown by 18%, from Rs. 1.9 to Rs. 8.5 and book value per share by 19%, from Rs. 14.7 to Rs. 69.8. On a consolidated basis, its operating income grew by 36.6%, EPS by 19.7% and BVPS by 25.4% in the last six years. At the end of the FY11, its consolidated operating income stood at Rs. 4916.7 Cr., EPS at Rs. 8.55 and BVPS at Rs. 71.IDFC managed to maintain a six-year-average ROA (Return on assets) at 3.3%, which is significantly higher than the benchmark of 1.25%. As of March 31, 2011, its net non-performing assets were 0.1%, which shows its asset quality is very good. IDFC's capital adequacy ratio stood at 24.48% of the risk weighted assets, as against the minimum requirement of 15%.

    Conclusion:
    In a nut shell, IDFC has shown tremendous performance in the past. Thus given the growth projection of INDIA in the future I feel there is tremendous growth opportunity for IDFC which is bound to be reflected in the share price soon so I recommend a strong BUY for this stock at current market price which is 104.

    Submitted by: Manmeet malik Seat no.: 1223

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