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Published on 20/11/2020 2:32:21 PM | Source: Angel Broking Ltd

Vodafone Idea Positive development beneficial for IDFC first bank By Jaikishan Parmar, Angel Broking

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Below are Views On Vodafone Idea Positive development beneficial for IDFC first bank By Mr. Jaikishan Parmar- Sr. Equity Research Analyst, Angel Broking Ltd

“In last 3 days, there is a lot of positive news are coming for Vodafone Idea (VIL) such as (a) on completion of Bharti infratel and indus tower mega-merger, VIL receives Rs,3760cr 2) Possibility of capital infusion from a consortium led by Oaktree Capital Management for capital expenditure and debt servicing. The above news is positive for all lenders, and IDFC First bank has Rs.3244cr exposure (Funded – Rs. 2,000cr and Non-Funded – Rs. 1,244cr) which is 18% of net worth and had 50% provision on it. However, in Q2FY21 Bank has released Rs. 811cr (out of existing provisions of Rs. 1,622cr) against a VIL Exposure based on improved prospects and management commentary at the company, and utilized it to create additional COVID provisions during Q2 FY 21. If Balancesheet of VIL improves further than IDFC FIsr Bank can additionally write back remaining provision to strengthen balance sheet for future uncertainties and built additional non-specific provision which will provide comfort to an investor. In the last few quarters, IDFC first bank has been able to build liability (CASA and retail deposit) which will help them to reduce high-cost borrowing, and eventually, retail customers will increase daily cash management activity into IDFC first infrastructure. Presently IDFC first bank is trading at 1x FY22 Book value which is reasonable considering retail mix and growth in liability franchise. We have a Buy rating on IDFC First bank.”

 

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