General Overview Of IDFC FIRST Bank

IDFC FIRST Bank Limited, listed in NSE and BSE, is a leading Indian financial institution,
specializing in providing debt financing to MSMEs and Consumers in India.

Between 2008 to 2010, the Company was largely in the business of wholesale Financing,
asset management, and had JVs in Foreign Exchange and retail equity Broking. Between
2010 to 2012, Mr. Vaidyanathan acquired a stake in the company, changed the business
model to retail, and executed a Management Buyout of the company by securing equity
backing from Warburg Pincus for Rs. 810 Crores and changed the name of the company to
IDFC FIRST Bank. In the process the company got new shareholders, reconstituted a new
board and started new retail business lines.

The Market Cap of IDFC FIRST Bank has increased from Rs. 7.90 billion ($121 mn) on June
30 2012 (FY ending prior to the buyout) to Rs. 60.96 bn on June 30, 2018. ($0.94 bn).

The founding theme of IDFC FIRST Bank is that financing India's 50 million MSMEs and its
emerging middle class, with a differentiated model, based on new technologies provides a
large and unique opportunity.

Unlike traditional models of financing, IDFC FIRST Bank has successfully created new
models to finance MSMEs and Indian consumers, in the hitherto unbanked and under-
penetrated segments. The Company uses a differentiated model, based on new
technologies and deep analytics. With this differentiated approach, IDFC FIRST Bank has
financed over 7.0 million customers in more than 225 locations across India and built loan
assets of Rs 326.22 Bn (USD 4.47 bn) as on 30 September, 2018, with 91% of its loan
assets in the Consumer & MSME financing space. IDFC FIRST Bank has maintained high
asset quality over the years. The Gross and Net NPA of the Company is 1.62% and 1.00%
respectively as of 30th June 2018 on 90 dpd NPA recognition basis.

The company enjoys the highest long term credit rating of AAA. IDFC FIRST Bank is
focused on building an institution on strong pillars of ethics, values and high corporate
governance.
 Shareholding pattern of IDFC FIRST Bank

Sales

Promoter MF FII Other Institutions Public

Shareholding Summary Sales

for IDFC FIRST Bank
Promoter 60
MF 12
FII 9
Other Institutions 12
Public 7

Shareholding Pattern - IDFC First Bank Ltd.

Holder's Name No of Shares % Share Holding

No Of Shares 5672409600 100%

Promoters 2268937489 40%

Foreign Institutions 656180651 11.57%

N Banks Mutual Funds 161380437 2.85%

Central Govt 261400000 4.61%

Others 675924657 11.92%

General Public 1166993745 20.57%

Financial Institutions 481592621 8.49%

IDFC First Bank Ltd. was incorporated in the year 2014. Its today's share price is 63.55. Its
current market capitalisation stands at Rs 35970.26 Cr. In the latest quarter, company has
reported Gross Sales of Rs. 158673.1 Cr and Total Income of Rs.175894.67 Cr. The
company's management includes Vishal Mahadevia, Sunil Kakar, Sanjay Kumar, Sanjeeb
Chaudhuri, Pravir Vohra, Hemang Raja, Brinda Jagirdar, Aashish Kamat, V Vaidyanathan.

It is listed on the BSE with a BSE Code of 539437 , NSE with an NSE Symbol of
IDFCFIRSTB and ISIN of INE092T01019. It's Registered office is at K R M Tower, 7th Floor,
No. 1,Harrington Road,ChetpetChennai-600031, Tamil Nadu. Their Registrars are ACC
Ltd. It's auditors are BSR & Co LLP, Deloitte Haskins & Sells

Management of the State Bank Of India (IDFC FIRST BANK):- State Bank
of India (IDFC FIRST BANK) a Fortune 500 company, is an Indian Multinational, Public
Sector Banking and Financial services statutory body headquartered in Mumbai. The
rich heritage and legacy of over 200 years, accredits IDFC FIRST BANK as the most
trusted Bank by Indians through generations.
IDFC FIRST BANK, the largest Indian Bank with 1/4th market share, serves over 44
crore customers through its vast network of over 22,000 branches, 58,500 ATMs, 66,000
BC outlets, with an undeterred focus on innovation, and customer centricity, which stems
from the core values of the Bank - Service, Transparency, Ethics, Politeness and
Sustainability.
The Bank has successfully diversified businesses through its 11 subsidiaries.

IDFC FIRST Bank Management Team:-

Name:- Mr. V. Vaidyanathan Name:- Dr.(Mrs.) Brinda Jagirdar

Designation:- Managing Director & CEO Designation:- Independent Director
Name:- Dr. Sanjay Kumar
Designation:- Non-Executive Non-Independent Director

Strengths, Weaknesses, Opportunities & Threats (SWOT) analysis of the

IDFC FIRST Bank
Strengths of IDFC FIRST Bank
 Inverted Hammer (Bullish Reversal).
 Growth in Net Profit with increasing Profit Margin (QoQ).
 Increasing profits every quarter for the past 4 quarters.
 Company with Zero Promoter Pledge.
 FII / FPI or Institutions increasing their shareholding.
 Stock gained more than 20% in one month.
 Strong Momentum: Price above short, medium and long term moving
averages.

Weaknesses of IDFC FIRST Bank

 Red Flag: High Interest Payments Compared to Earnings.
 Inefficient use of shareholder funds - ROE declining in the last 2 years.
 Inefficient use of assets to generate profits - ROA declining in the last 2 years.
 Red Flag: Downgrade by Credit Rating Agency.
 High PE with Negative ROE.
 Companies with High Debt.
 Declining Net Cash Flow : Companies not able to generate net cash.
 Annual net profit declining for last 2 years.
 Book Value Per Share deteriorating for last 2 years.
Opportunities of IDFC FIRST Bank
 Brokers upgraded recommendation or target price in the past three
months.
 Results Screener: Stocks with upcoming results which are seeing positive
shifts in share price.
 Highest Recovery from 52 Week Low.

Threats of IDFC FIRST Bank

 Increasing Trend in Non-Core Income.
 Stocks with high PE (PE > 40).
 Increase in NPA in Recent Results.
 Increase in Provisions in Recent Results.

Competitive Analysis Of IDFC FIRST Bank VS YES Bank And

CANARA Bank

IDFC FIRST Yes Bank, which received
Bank's revenue is the its greenfield banking
ranked 12th among its top license in May 2004,
10 competitors. The top commenced its lending
10 competitors average operations in October 2004.
8.3B. Over the last three The bank had 356 branches
quarters, IDFC FIRST and 600 ATMs at the end of
Bank's revenue has FY12. The asset mix is
decreased by 11.4%. expected to change from
Specifically, in 2020's C&IB (65%), Business
revenue was 224.9M; in Banking (23%) and Retail
2020, it was 215.7M; in Banking (12%) in FY12 to
2020, it was 253.7M. C&IB (40%), Business
Banking (30%) and Retail
Banking (30%) by FY15.
The bank's employee base
stood at 5,600 at the end of
March 2012 having hired
1,700 employees in FY12.
Further, it is targeting a
franchise of 500 branches
and an employee base of
7,200 by FY13.
Canara Bank is the fourth
largest bank in the country
in terms of asset size after
SBI, ICICI Bank and PNB.
The bank had 5% share of
the total non-food credit and
4.8% share of the total
deposits in the banking
sector in FY10. The bank
has national presence
through 3,000 branches
across the country. As a
part of its strategy on loan
growth, Canara Bank is
going slow on retail
advances (of which 40% are
low yielding mortgage
assets) and instead focusing
on the SME and corporate
segments for growth.
Conclusion and way forward for IDFC FIRST Bank

IDFC FIRST Bank management seems to be more interested in using the Moody’s
downgrade to wrest more capital from the government than improving its functioning. On the
latter, attention has been drawn to the level of non-performing assets (NPAs). This is
unfortunate since it is likely to adversely impact a management that is doing the right thing
and should be appreciated instead.

The ratings downgrade was caused by two factors. First, the bank’s asset quality (level of
non-performing assets) deteriorated, requiring higher provision. Second, write-offs and
growth in assets also brought down capital adequacy. Let’s take the second issue first.
There is only one way to put matters right: the government, which owns 59 per cent in the
bank, has to take the lead in bringing in more capital. The present resources position of the
government makes it difficult for it to cough up large amounts of cash (up to Rs 12,000 crore,
according to the bank’s calculation). This is understandable but is not reason enough for the
Union finance ministry to take umbrage at being told what it must do and aver that the
management is not doing a good job. The communication skills of the bank’s current
chairman, V. Vaidyanathan, may not be exactly what the finance ministry would like them to
be, but that has nothing to do with his ability to offer good leadership to the bank at a time
when it is sorely needed to set things right.

The genesis of the current problem goes back to the time at the bank when provisions for
NPAs were not made, in virtual defiance of the norms laid down by the banking regulator,
the Reserve Bank of India (RBI). So Mr Chaudhuri adopted the only course available: fall in
line with what the RBI requires and provide for the shortfall in past provisioning. In no way
does the sharp rise in current provisioning reflect the current performance of the bank; it is a
throwback to the past. In fact, the management’s effort to clean up the balance sheet should
be appreciated. Unfortunately for the bank, the need for higher provisioning, to make up for
the past, comes at a time when the economy is regressing and business distress going up,
adversely affecting the loan quality of lenders. If the bank’s owners, the government, were to
do its job right, it would have to create three boxes: one for the actions and consequences of
rectifying past errors; another for the fallout of the current adverse economic climate; and yet
another for the actions and consequences for which the current management can be held
solely responsible. If the finance ministry were to carry out this exercise sincerely, it would
help itself as well as the largest bank in the country. To act out of pique would be short-
sighted and unfortunate for all.