Price target of 200 for IDFC based on SOTP: ICICI Securities

Ketan Kharkhanis, Head of Active Trader Service, ICICI Securities in a chat with ET Now gives his outlook on IDFC.

In which direction do you estimate IDFC is going from now on?

We saw profits year on year rising by around 22% to 1042 crores. Also the management has given a very positive outlook of various strong growth in this financial year. They will be raising around 3500 crores of tier 1 capital to fund this growth. Based on this management guidance, we are putting a 27% CAGR growth target on this stock.

It has 8.9 billion of AUM with it and it is likely to grow at around 22% in financial year 2011 to around 49,700 crores. Also the non-interest income is contributing to around 47% of its revenue which is likely to continue.

Based on this, we are evaluating the stock at around 2.3 times its existed book value on FY12 earnings and we arrive at a price target of around 200 based on SOTP which includes the stake it holds in NSC and AUM valuation of IDFC also.