IDFC First could be another HDFC Bank over next 5 yrs: Sanjiv Bhasin, IIFL Securities
You could make a lot of wealth in this stock in the next two years, says Bhasin.
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IDFC First Bank which gets listed is a huge overweight and a huge wealth creating opportunity for investors, Sanjiv Bhasin, EVP-Markets & Corporate Affairs, IIFL Securities, tells ET Now.
Edited excerpts:
What is the sense you are making of the combined entity of IDFC Capital First Bank as it debuts on the bourses today?
As a disclosure, we have a big overweight and an accumulate on IDFC Bank and Capital First. We think this will be the best amalgamation of MSME and retail loans and is coming at a time when both have cleansed their books.
Capital First had an immaculate book with hardly any exposure to IL&FS. We think going forward, they will garner a huge market share which is already evident from the underperformance of NBFCs. Combined market cap at 22.5 will surely double in the next two years. A disclosure, we have an overweight and a buy rating on IDFC Bank. We think you could make a lot of wealth in this stock and in this bank as a franchise in the next two years.
Why are you so confident? A bank needs a strong CASA to grow and it is not going to be easy for a new entrant to raise CASA because IDFC Bank in its first avatar really failed to gain both market share and mindshare.
It is a clear case. You have seen what has happened in the rerating of Axis and ICICI Bank. A change of guard and inefficient management going will be a huge welcome. I have a lot of confidence in Mr Vaidyanathan. He has proven and delivered. When he listed Capital First, it was a one-time price to book. It went to almost four. Here you have an entity at 1.3 times price to book, I agree on CASA and all, but that will fall in place, So definitely a huge overweight and a huge wealth creating opportunity for investors.
If you have HDFC Bank in your portfolio, will you sell it and buy Capital First?
Edited excerpts:
What is the sense you are making of the combined entity of IDFC Capital First Bank as it debuts on the bourses today?
As a disclosure, we have a big overweight and an accumulate on IDFC Bank and Capital First. We think this will be the best amalgamation of MSME and retail loans and is coming at a time when both have cleansed their books.
Capital First had an immaculate book with hardly any exposure to IL&FS. We think going forward, they will garner a huge market share which is already evident from the underperformance of NBFCs. Combined market cap at 22.5 will surely double in the next two years. A disclosure, we have an overweight and a buy rating on IDFC Bank. We think you could make a lot of wealth in this stock and in this bank as a franchise in the next two years.
Why are you so confident? A bank needs a strong CASA to grow and it is not going to be easy for a new entrant to raise CASA because IDFC Bank in its first avatar really failed to gain both market share and mindshare.
It is a clear case. You have seen what has happened in the rerating of Axis and ICICI Bank. A change of guard and inefficient management going will be a huge welcome. I have a lot of confidence in Mr Vaidyanathan. He has proven and delivered. When he listed Capital First, it was a one-time price to book. It went to almost four. Here you have an entity at 1.3 times price to book, I agree on CASA and all, but that will fall in place, So definitely a huge overweight and a huge wealth creating opportunity for investors.
If you have HDFC Bank in your portfolio, will you sell it and buy Capital First?
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Surely, 100% I would say this is where you can expect bang for the bucks because this could be another HDFC Bank in the making in the next five years. Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
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