Maintain 'HOLD' on IDFC - Geojit BNP Paribas

- IDFC's Q2FY13 earnings came in better than estimates, on account of lower provisions and lower employee cost. Adjusting for provisions/employee cost, PAT came in-line with estimates.

- Management indicated that provisions could increase in H2FY12.

- Loan growth was up 36%, YoY, and 6%, QoQ. IDFC over the last one year has increased exposure (in terms of sanctions) to non-power / road / telecom-related sectors. Other sectors contributed 13% in Q2FY13 as compared to 10% in Q2FY12.

- Revenue from Institutional broking and Investment banking business recovered to Rs.27 crores (up 15%, YoY).

- Reported spreads improved to 2.6% vs. 2.5% in Q1FY13.

- Management maintained its guidance of 20% loan growth and 1% gross NPAs for FY13.

- Exposure to gas/coal linkage-based plants is about 2.4% of the total book, which could be problematic.

- IDFC is currently trading in the Rs.160 range and Hold recommendation is maintained on the stock.

Source : Equity Bulls

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