IDFC First bank Analysis : An Indian Multibagger stock -Shockedyou

IntroductionIdfc First Bank share price is rising day by day and due to this people are getting more and more curious about this bank. Can IDFC First Bank become the next HDFC Bank or it will just remain Today we are going to clear all your doubts and we will also tell you the amazing story of IDFC first bank formation . In conclusion we will tell you about our view point on buying this share. So let’s get started

HISTORY AND BACKGROUND 

Mr. V. Vaidyanathan

IDFC first bank was founded by Mr. V. Vaidyanathan, this bank came into existence in 2018 by the merger of IDFC bank and capital first. The merger facilitated the creation of a robust banking institution with an extensive product portfolio and a widespread customer base. IDFC first bank offers a huge service in micro finance, business loan, home loan etc,. It has a total customer base of  7.3 million.

EARLY CHALLENGES 

When IDFC first bank was formed it was suffereing from huge NPA ( Non Performing assets) problem. The main defaulting risk was from Vodafone Idea company which had more than 50000 crores of debt. IDFC first bank was also one of the biggest lender to this company. To mitigate this risk bank started diverting its profit in making provision due to which there Profit and loss statement started showing loss and share price remain grounded. 
Second major challenge came to this bank during Corona time. As this bank also deals in micro finance (unsecured loans ranging from 5000-100000 rupees.). Many people started defaulting this time which gave deep shock to the financial stability of the bank. 
But as I always say “it is not over until it’s all over”

STRONG COMEBACK

The undying spirit and a fabulous management which is not ready to give up at any cost is what makes IDFC first bank different from others. After seeing so many losses and failures this bank implement many schemes and plans to attract customers and in less than 1 year they turned this bank into profit making bank, IDFC first bank closed 2020 financial year with a net loss of 2843 crore rupees. But at the end of 2021 finacial year IDFC first bank closed its book at a profit of 483 crores, and to your surprise IDFC first bank  in this Q1 of financial year 2023 bank reported its highest profit of rupees 2437 crore
One of the major revolution which this bank has bought is on  IDFC Net banking and online transactions which are rising like a rocket. Recently they have started sponsoring Indian Cricket team which shows there genius marketing brain. As we all know that Indians are mad for cricket, so this bank decided to reach millions of Indian by just sponsoring Indian Cricket team.   

 Some Major Financial Numbers 

1. Market cap (as of july 2023) – 53370 cr.
2. Price to earning ratio (p/e)- 21.5
3. Debt– Not considered in case of banking shares
4. Average profit last 3 years (approx)
5. Capital Adequacy ratio– 16.06%
6. Top selling products– Home loan, micro finance and business loan
7. Major competitors– Bandhan Bank, Ujjivan small finance bank etc,.
8. Current share price(as of july 2023)– 80.5 rupees

If you want to know more about this bank then you can read the Annual report of this bank by just clicking here.

Now coming to the main point for which you are reading this blog and that is whether you should buy this share or not. 

As an long term investor in stock market I am telling you this thing with my experience that investing is not done on the basis of just by seeing the profit and loss, debt or other financial numbers, bet is always taken on the management of the company.

If a company is high on debt and financial condition doesn’t look good but the management which is running the company is visionary, hard working and honest, they will somehow find any way to bring company in right track. Same was the case with IDFC first bank, they were suffering from high NPA (non performing assets ) problem due to which there share price crashed but Mr. V. Vaidyanathan (Ceo and founder) and his team did fabulous work and made this bank a profit making from a loss making bank. In this Q1 of financial year 2023 bank reported its highest profit of rupees 2437 crore

It is worth noting that while IDFC First Bank has faced these challenges, it has also taken proactive measures to address them. The bank’s focus on customer-centricity, technology-driven solutions, and diversified product offerings reflects its commitment to overcome obstacles and building a strong presence in the banking sector.

CONCLUSION

According to our analysis this bank has some serious potential and from our side it is a 

                                      BUY CALL 

Also price of this bank looks very near to the Intrinsic value of 78.5 rupees which makes it very attractive.
But before investing in any stock or taking any call regarding this share, please do research by yourself  also because it is your hard earned money and nobody can tell its better use than you. 
If you want to learn more about stock market you can visit our following blogs.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top