>IDFC (ICICI Securities)

CAPITAL MARKET PRESSURE VISIBLE

Reason for report: Q3FY09 results review & earnings revision



IDFC’s Q3FY09 net profits declined 15% YoY, driven by sharp fall in non-interest

income (down 61% YoY), primarily on account of slowdown in capital marketrelated

businesses and lower gains booked on equity, even as NII growth

remained strong (up 44% YoY in Q3FY09). Despite sharp moderation in loan

growth to 7% YoY, NII grew a robust 44% YoY, driven by 20bps increase in

spreads to 2.3% for rolling 12 months sequentially. Asset quality remained robust

with nil NNPLs & no incremental slippages – loan-against-shares (LAS) fell to

6.7% QoQ of outstanding (o/s) book. We reduce FY09E & FY10E earnings

estimates 8.6% & 19.1% respectively to reflect lower loan growth and pressure on

capital market-related income. Maintain BUY with target price of Rs90/share.



To see full report: IDFC