BUY IDFC LTD. - Fullerton Securities

Infrastructure Development Finance Company Ltd (IDFC) is 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. It is engaged in providing finance and advisory services for infrastructure projects, asset management and investment banking.

- From Project Finance to Entire Infrastructure Financing Value Chain:- IDFC has evolved itself from mere a 'government advisory and project finance' company during its initial days to a 'complete solutions provider in infrastructure finance' space recently. The company has achieved this through diversification into several businesses through organic and inorganic routes.

- Focus on 'Refinancing' Opportunity:- IDFC has now started focusing on 'refinancing opportunities' in infrastructure projects as it believes that the first generation of projects that are coming to the end of their construction, will generate visible cash flows. This will eventually provide an opportunity to these companies to refinance themselves at a higher credit rating. IDFC believes that there would be much lower risk in refinancing business and it will add value to the clients as well.

- Exposure to Energy Sector Coming Down Progressively:- Energy, transportation and telecommunication continued to be the top three sectors in IDFC's total exposure contributing 41%, 28% and 21% respectively. The share of energy in the total exposure however, has been coming down progressively from 46% as on March 31st 2011 to 41% as on March 31st 2012.

- Based on a consolidated FY14 P/ABV multiple of 1.75, the fair value for the company works out to Rs 150.7/share.

Source : Equity Bulls

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