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Analyst Meet / AGM
31-Jul-13
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Conference Call
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IDFC
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Bond rates being volatile and higher, sustaining growth in refinancing business looks difficult in FY'14
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The company held its conference call on 30th July'13 and was addressed by Mr. Rajiv Lal, Executive Chairman and Mr. Vikram limaye MD and CEO
Key highlights
- As per the management, on macro prospective, the recent action done by RBI, to protect the Rupee volatility is a serious concern in wholesale funding market. Management expects the same policy action to remain for at least about a quarter. This can have a serious ramification on growth and thus FY'14 continues to remain challenging.
- Energy, Transport and Telecommunication continues to be the largest sectors in terms of exposure, they constitute about 40%, 25% and 22% respectively of total company's exposure of loan book.
- The provision for Q1 FY'14 stood around Rs 59 crore, down by about 43% y.o.y. However, Q1 FY'13 provision included one time provision of about Rs 60 crore, made towards Deccan Chronicle investments.
- Net NPA stood at around 0.2% for June'13 quarter. As earlier mentioned by the management in past conference calls, it reiterated that the Net NPA number is not sustainable and in next 15-18 months looks to be in the region of around 1%.
- There are no much-restructured assets at this point in time, but the real threat of restructured assets come from gas based power plants. These projects as per the management are fully viable project, but the issue will be only non-availability of raw material. If due to the revision, in gas prices effective from April'14, there is higher gas output and availability, then the plants can be saved.
- Loan book grew by about 16% in FY'13, of which more than 60% was due to the refinancing business. Now with the bond rates being volatile and higher, the same growth in refinancing business looks difficult in FY'14.
- Also the infrastructure sector funding pie, per se is shrinking as no very few Greenfield expansions and projects are happening. Thus loan book growth in FY'14 looks challenging. It would require macro to improve significantly from here on and RBI to take action in terms of lowering rates etc, to generate a double digit growth in FY'14, but high single digit growth is what looks like for FY'14, looking at the current scenario.
- In short as per the management, the growth visibility is difficult in FY'14 at current juncture.
- IDFC has applied for new banking license to RBI and is awaited for its approvals.
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