Reviews

We had recommended IDFC First Bank in volume 34, issue no. 10, dated April 15-28, 2019, under the ‘Analysis’ segment. 

The stock was trading at Rs. 45.70 then and was recommended owing to opportunity in the banking segment, bank’s aggressive expansion plans and large liability franchise because of CASA. IDFC First Bank was founded by the merger of IDFC Bank and Capital First on December 18, 2018. IDFC Bank was primarily focused on project finance as well as the mobilisation of capital for private sector infrastructure development. Meanwhile, Capital First’s focus was on financing self-employed entrepreneurs, MSMEs and consumers through the platform of technology and growing the retail franchise. In January 2018, IDFC Bank and Capital First announced their decision to merge and the shareholders of Capital First were issued 139 shares of the merged entity for every 10 shares of Capital First. The bank’s net interest income (NII) came in Rs. 1,113 crore in Q4FY19 as against Rs. 1,145 crore in Q3FY19, which included a one-time interest recovery amount of Rs. 81 crore from one of the defaulted accounts. Without the effect of the same, the NII can be considered to have increased 4.5 per cent QoQ. Its net interest margin (NIM) was reported at 3.03 per cent for the quarter. Profit before provisions and contingencies was reported at Rs. 281.48 crore for the same period. However, the company reported loss of Rs. 218.03 crore in Q4FY19. The CASA of the bank posted a growth of 60 per cent YoY to Rs. 9,114 crore in FY19. Despite being a newly merged entity, the bank performed quite well in the quarter ended March 2019, particularly in terms of CASA growth. The growth of the loan book was driven by the growth in retail loans, which scaled up by 13 per cent QoQ to Rs. 40,812 crore for the year ended March 2019. The contribution of the retail-funded assets now stands at 37 per cent of the overall funded assets. We thus recommend a HOLD.





We had recommended Ashoka Buildcon in volume 33, issue no. 17, dated July 23-Aug 5, 2018, under the ‘Choice Scrip’ segment. The stock was trading at Rs. 147 then and was recommended owing to strong order book, government’s impetus on infrastructure development and the company’s divestment of stake in ACL. Ashoka Buildcon is engaged in the business of civil construction. The company builds and operates roads and bridges in India on a build, operate and transfer (BOT) basis. It also engaged in engineering, designing and procuring raw materials and equipment for construction of roads, bridges, distribution transformers, electricity substations, commercial buildings, industrial buildings and institutional buildings etc. On the consolidated financial front, the net sales of the company has grown by 86.15 per cent to Rs. 1307.37 crore in Q4FY19 versus Rs. 702 crore in the same quarter of the previous year. The PBIDT of the company stood at Rs. 181.47 crore in Q4FY19 and witnessed a rise of 124.75 per cent YoY from Rs. 80.74 crore. The net profit has, however, dropped by 7 per cent YoY to Rs. 97 crore in Q4FY19 versus Rs. 105 crore. In annual terms, the net sales have increased by 56 per cent to Rs. 3,820.64 crore in FY19 as against Rs. 2,448.26 crore in FY18. The PBIDT of the company in FY19 was Rs. 515.18, showing a growth of 75 per cent from Rs. 293.41 crore in FY18. The company has witnessed a 20 per cent increase in PAT to Rs. 286 crore in FY19 as against Rs. 237.01 crore in the previous fiscal. The share has fallen by 1.25 per cent since our recommendation, however we recommend a HOLD.

(Closing price as of June 04, 2019)