Year
|
Open
|
High
|
Low
|
Close
|
|
|
2004
|
62.90
|
115.00
|
29.25
|
109.80
|
|
2005
|
110.95
|
130.95
|
76.30
|
97.15
|
|
2006
|
98.15
|
110.00
|
48.50
|
76.30
|
|
2007
|
76.80
|
181.00
|
66.50
|
165.30
|
|
2008
|
166.50
|
180.30
|
53.00
|
67.65
|
|
2009
|
68.00
|
140.00
|
39.75
|
127.45
|
|
2010
|
128.00
|
202.25
|
105.85
|
164.75
|
|
2011
|
165.75
|
168.30
|
77.40
|
77.80
|
|
2012
|
78.30
|
121.50
|
77.15
|
111.40
|
|
2013
|
112.10
|
118.20
|
52.30
|
66.45
|
|
2014
|
66.85
|
116.50
|
52.95
|
73.15
|
|
2015
|
73.25
|
95.70
|
52.45
|
87.80
|
|
2016
|
90.80
|
91.15
|
47.40
|
68.85
|
|
The Book Value of IDBI Bank is over Rs 110 giving the relative Valuation of 0.6….that’s of course one accepts current audited GPA levels of Rs 19615 crs ,that’s 8.94% of Advances and with a 62.92 % of Provision Coverage
Government owns 80.16% of IDBI Bank and if it is open to bring this down below 50% as proclaimed in the Budget by our FM then it begs the question ~ Will they just bring it down but yet retain Management Control or will IDBI really be up for Privatisation and therefore up for Sale ! ?
Quickly the IDBI Employees have voiced their displeasure and threatened to go on strike in the crucial last week of this month of March 2016 which closes out FY 16
Why would the IDBI Employees resist Privatisation or Government diluting it’s stake below 50!?
Seriously ask yourself this ! I reflected and immediately came up two big reasons in my view :
- Insecurity of Jobs ~ This is understandable as Employees have huge job security under the Government ~ Bank can Hire but not Fire ~ at best Government can try VRS as they’ve been doing over the years in PSU Banks ~ Connect this with how bloated Government Enterprises really are on workforce be it the Railways or Coal India
- Accountability & Transparency in Operations ~ This would open a Pandora’s Box in the Bank for all the NPAs & who really is responsible in the Bank to have advanced Loans that have turned Bad.Of the over Rs 2 lakh crores advances ,the Bank reportedly has an exposure of Rs 7000 crs to the JaiPrakash Group,Rs 15000 crs to the Essar Group and @ Rs 925 crs to Kingfisher Airlines.In fact the ED is investigating Vijay Mallya & his Kingfisher Airlines for Siphoning off @ Rs 300 crs Funds from the Rs 900+ crs IDBI Loan
So will our Government be influenced by the IDBI Employees opposition & not go ahead with it’s plans to sell it’s stake in IDBI Bank to bring it below 50% ?…the Budget already shows FY 17 Disinvestment Target of Rs 36000 crs + Precise Strategic Disinvestment of Rs 20500 crs.This would include IDBI Bank Stake Sale planned read more
Last Few Years I have consciously stayed away from PSU Banks,Oil & Steel & Power Companies
Now you’ll know why !
There has been serious wealth destruction for those who had invested in them
So it was always with some degree of amusement I observed many analysts and fund managers and stock market experts recommend these over the years and justify their call even when it was obvious these companies were bleeding profusely
This Post is about PSU Banks
Who is to Blame for this Wealth Destruction ?
I squarely lay the Collective Blame on the various Central & State Governments that ruled & rule,Ministry of Finance Bureaucrats & Finance Ministers,the Board of Directors of all these Banks led by the Chairman & MDs & even the RBI Boards led by the various Governors & their deputies in these last few years….they preach Corporate Governance but do not practice it….how else will vested interests be served
They have deliberately let this come to past throwing caution to the winds when Lending and then not providing adequately and in time for the NPAs many of which were not even identified as such ….and their delay in declaring many defaulters as wilful…Supreme Court has been seized of this danger and have directed RBI to provide to it within six weeks in a sealed cover the list of all defaulters over Rs 500 crs.One Bank Chairman in the analyst meet for Q 3 FY 16 results recently refused to identify the Big Defaulter for which the Provision was made !
If it was not for the aggressive stand taken by the present Governor,Mr Raghuram Rajan and the Asset Quality Review in the second half of 2015,the Banks would have continued under providing for NPAs & even not identifying them in their entirety…the role of statutory auditors too comes under scrutiny here
The result has been a damaging Q 3 FY 16 for the PSU Banks as they have been forced by RBI to provide properly based on the AQR conducted
It is in this context I am astonished at the recent lament by none other than Mr Deepak Parekh who says that if the Banks have to undergo one more quarter of provisioning for NPAs like Q 3 it would tantamount to an Anesthesia overdose & Banks would become comatose !…Come On Mr Parekh !
RBI has asked the Banks to clean up by March 2017
My worry is that NPA Levels may increase on better & proper identification & classification and there will be more pain for these Banks.This would mean higher Provisions for the next few quarters read more
IDFC Bank makes an Exchange Debut on BSE today listing at @ Rs 70 & after a High of Rs 73.45 and a Low of Rs 67 closing too at @ Rs 70 with volumes of 4.3 million shares
What’s it Worth ?
Well the Market Cap is @ Rs 23876 crs at Rs 70.40 Share Price
Just to recall ~ IDFC received the RBI in-principle approval on April 9,2014 to set up a Bank in the Private Sector
It began the process to do so with the Scheme of Demerger being approved by the Madras High Court on June 25,2015 with every IDFc Shareholder getting 1 share in IDFC Bank for every share held in IDFC
IDFC Bank was incorporated on October 21,2014
It got listed today at @ Rs 70 with an Equity Capital of Rs 3391.53 crs (FV Rs 10) and Reserves of Rs 5289.60 crs ( largely Share Premium of Rs 5232.56 crs)
The Networth thus on listing is Rs 8681.13 crs computing to a Book Value of Rs 25.60 which at listing Price of @ Rs 70 gives a PBV of 2.73
IDFC Bank began on October 1,2015 with a loan book of Rs 46381 crs
The Capital Structure evolved as below
CAPITAL STRUCTURE
|
Date
|
No of Shares Issued
|
Issue Price
(Rs )
|
Nature of Issue
|
Cumulative Share Capital
(Rs Crs)
|
Cumulative Share Premium
(Rs Crs)
|
October 21,2014
|
50000
|
10
|
MOA
|
5,00,000
|
–
|
July 7,2015
|
1,250,000,000
|
40
|
Rights to IDFC Financial Holding Co Ltd
|
12,500,500,000
|
3750
|
September 30,2015
|
547462668
|
37.08
|
“”””””””””
|
17,975,126,680
|
5233
|
October 9,2015
|
1594020668
|
–
|
Scheme of Demerger
|
33,915,333,360
|
–
|
Top 10 Shareholders as on October 27, 2015
|
Sr
|
Shareholder
|
No of Shares
|
Stake %
|
1
|
IDFC Financial Holding Company Limited and its nominees
|
1,797,512,668
|
53.00
|
2
|
President Of India
|
261,400,000
|
7.71
|
3
|
Sipadan Investments (Mauritius) Limited
|
151,145,989
|
4.46
|
4
|
National Westminster Bank PLC as Depositary of First State Asia Pacific Leaders Fund a sub-fund of First State Investments ICVC
|
74,206,298
|
2.19
|
5
|
Actis Hawk Limited
|
37,091,569
|
1.09
|
6
|
Orbis Sicav – Asia Ex-Japan Equity Fund
|
34,396,487
|
1.01
|
7
|
CLSA global markets pte. Ltd.
|
27,530,245
|
0.81
|
8
|
First State Investments (Hong Kong) Limited A/C First State Asian Equity Plus Fund
|
21,771,232
|
0.64
|
9
|
Orbis Global Equity Fund Ltd
|
17,919,198
|
0.53
|
10
|
10 JP Morgan Sicav Investment Company (Mauritius) Limited
|
13,503,111
|
0.40
|
|
|
2,436,476,797
|
71.84
|
The Non Executive Chairman is Mr Anil Baijal while the MD & CEO is Dr Rajiv Lall who holds 1998984 shares in the Bank.Another IDFC Director Mr Vikram Limaye holds 2043728 shares
Here’s how the Peer Groups look on Market Cap & Price to Book
The Big Four Private Banks
|
|
HDFC Bank
|
ICICI Bank
|
Kotak Mahindra Bank
|
Axis Bank
|
Market Cap (Rs Crs)
|
272465
|
155126
|
120225
|
110620
|
Share Price (Rs) November 6,2015 Closing
|
1080
|
267
|
657
|
465
|
FY 15 Book Value
|
247
|
139
|
183
|
188
|
PBV
|
4.37
|
1.92
|
3.59
|
2.5
|
The Smaller Four Private Banks
|
|
IndusInd Bank
|
Yes Bank
|
IDFC Bank
|
IDBI Bank
|
Market Cap (Rs Crs)
|
54550
|
31785
|
23876
|
13570
|
Share Price (Rs) November 6,2015 Closing
|
921
|
758
|
70.40
|
84.60
|
FY 15 Book Value
|
193
|
280
|
25.60
|
141
|
PBV
|
4.8
|
2.7
|
2.75
|
0.60
|
IDBI Bank is plagued with high Gross & Net NPAs that have risen further to 6.92% and 3.16 % respectively on September 30,2015…explains why it’s available below Book
IDFC Bank begins with a relatively cleaner slate but is certainly not a bargain at PBV of 2.75,similar to closest Peer on the Market Cap upside,Yes Bank
However as Top 10 Shareholders as above own @ 72% stake it does augur well on the bourses as floating stock will be restricted
Will be interesting to see if IDFC Bank overtakes Yes Bank in Market Cap which is 33% ahead as of date and plays catch up with IndusInd PBV Valuations
Now that would be really interesting !
Downside too is open if NPAs begin rearing some head on the loan book position of Rs 46381 crs taken over on October 1,2015 from IDFC
Will keep a watch on IDFC Bank
Cheers !
|