X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
IDFC: Demerger initiatives yet to yield earnings growth - Views on News from Equitymaster
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  
  • Home
  • Outlook Arena
  • May 3, 2016 - IDFC: Demerger initiatives yet to yield earnings growth

IDFC: Demerger initiatives yet to yield earnings growth
May 3, 2016

IDFC declared the fourth quarter results of financial year 2015-2016 (4QFY16). The income from operations fell by 16.9% YoY, and the profits were down by 65.9% YoY during the quarter. Here is our analysis of the results.

Performance summary
  • For 4QFY16, net interest income (NII) was down by 37.3% YoY. During FY16, NII was lower by 19.5% YoY.
  • Other income in 4QFY16 grew by 25.8% YoY. For FY16, other income was down by 66% YoY.
  • The operating expenses jumped up by 49% YoY during the quarter. The cost-to-income ratio jumped to 55% in 4QFY16 from 24% in 4QFY15. For FY16, the cost-to-income ratio increased to 38% as compared to 17% in the year-ago period.
  • Due to escalation in operating expenses, the net profit fell by 66% during 4QFY16. For FY16, the NBFC posted a loss of Rs 9.3 bn due to creation of one-time specific provisions of Rs 25 bn to fully provide for the legacy stressed assets of the company.
  • The capital adequacy ratio of the bank stands at a robust 22% at the end of March 2016 (Tier-1 ratio of 21.5%). The NBFC's Infrastructure Debt Fund (IDF) business stands well capitalized with capital adequacy ratio of over 46%.
  • The Net NPAs (Non-Performing Assets) ratio for the bank stands at 2.4% on 31st March 2016. But as all the legacy assets have been adequately provided for, any further slippages will not impact the profitability and book value of the business entity.

    Consolidated financial performance snapshot
    Rs (m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Income from operations 25,712 21,360 -16.9% 96,398 90,357 -6.3%
    Interest expended 14,852 14,546 -2.1% 56,578 58,290 3.0%
    Net Interest Income 10,860 6,814 -37.3% 39,821 32,067 -19.5%
    Net interest margin
    Other Income 125 158 25.8% 827 281 -66.0%
    Operating expense 2,586 3,858 49.2% 7,052 12,287 74.2%
    Provisions and contingencies 3,751 -38 10,134 3,267 -67.8%
    Exceptional items 0 0 26,387
    Profit before tax 4,649 3,152 -32.2% 23,461 -9,593
    Tax 695 446 -35.8% 5,963 -3,675
    Effective tax rate 15.0% 14.2% 25.4% 38.3%
    Share of profit from associates -58 -218 -221 -650
    Minority interest 74 1,184 1504.2% 208 2,780
    Profit after tax/ (loss) 3,822 1,304 -65.9% 17,069 -9,348
    Net profit margin (%) 14.9% 6.1% 17.7% -10.3%
    No. of shares (m) 1,594
    Book value per share (Rs)* 63.4
    P/BV (x) 0.7

    * (Book value as on 31st March 2016)

To Read the Full Story, Subscribe or Sign In



DISCLOSURES UNDER SEBI (RESEARCH ANALYSTS) REGULATIONS, 2014
INTRODUCTION:
Equitymaster Agora Research Private Limited (hereinafter referred to as "Equitymaster"/"Company") was incorporated on October 25, 2007. Equitymaster is a joint venture between Quantum Information Services Private Limited (QIS) and Agora group. Equitymaster is a SEBI registered Research Analyst under the SEBI (Research Analysts) Regulations, 2014 with registration number INH000000537.

BUSINESS ACTIVITY:
An independent research initiative, Equitymaster is committed to providing honest and unbiased views, opinions and recommendations on various investment opportunities across asset classes.

DISCIPLINARY HISTORY:
There are no outstanding litigations against the Company, it subsidiaries and its Directors.

GENERAL TERMS AND CONDITIONS FOR RESEARCH REPORT:
For the terms and conditions for research reports click here.

DETAILS OF ASSOCIATES:
Details of Associates are available here.

DISCLOSURE WITH REGARDS TO OWNERSHIP AND MATERIAL CONFLICTS OF INTEREST:
  1. 'subject company' is a company on which a buy/sell/hold view or target price is given/changed in this Research Report
  2. Equitymaster and its Associates have financial interest in the IDFC Bank.
  3. Equitymaster's investment in the subject company is as per the guidelines prescribed by the Board of Directors of the Company. The investment is however made solely for building track record of its services.
  4. Equitymaster's Research Analyst or his/her relative have no financial interest in the subject company.
  5. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one percent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report.
  6. Neither Equitymaster, it's Associates, Research Analyst or his/her relative have any other material conflict of interest at the time of publication of the research report.
DISCLOSURE WITH REGARDS TO RECEIPT OF COMPENSATION:
  1. Neither Equitymaster nor it's Associates have received any compensation from the subject company in the past twelve months.
  2. Neither Equitymaster nor it's Associates have managed or co-managed public offering of securities for the subject company in the past twelve months.
  3. Neither Equitymaster nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  4. Neither Equitymaster nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
  5. Neither Equitymaster nor it's Associates have received any compensation or other benefits from the subject company or third party in connection with the research report.
GENERAL DISCLOSURES:
  1. The Research Analyst has not served as an officer, director or employee of the subject company.
  2. Equitymaster or the Research Analyst has not been engaged in market making activity for the subject company.
Definitions of Terms Used:
  1. Buy recommendation: This means that the investor could consider buying the concerned stock at current market price keeping in mind the tenure and objective of the recommendation service.
  2. Hold recommendation: This means that the investor could consider holding on to the shares of the company until further update and not buy more of the stock at current market price.
  3. Buy at lower price: This means that the investor should wait for some correction in the market price so that the stock can be bought at more attractive valuations keeping in mind the tenure and the objective of the service.
  4. Sell recommendation: This means that the investor could consider selling the stock at current market price keeping in mind the objective of the recommendation service.
Feedback:
If you have any feedback or query or wish to report a matter, please do not hesitate to write to us.

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

IDFC LIMITED SHARE PRICE


Oct 18, 2017 (Close)

TRACK IDFC LIMITED

  • Track your investment in IDFC LIMITED with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

IDFC LIMITED 5-YR ANALYSIS

Detailed Financial Information With Charts

COMPARE IDFC LIMITED WITH

MARKET STATS