Sanjiv Bhasin, EVP-Markets & Corporate Affairs, IIFL Securities, tells ET. IDFC First Bank which gets listed is a vast overweight and a vast wealth creating the chance for investors.
What is the sense you are making of the merged entity of IDFC Capital First Bank as it debuts on the bourses today?
As a repots, we have a significant 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 vast market share which is already evident from the underperformance of NBFCs. Combined market cap at 22.5 will surely double in the coming 2 years. A report, we have overweight and a buy rating on IDFC Bank. We think you could make a lot of wealth in this stock and this bank as a franchise in the coming 2 years.
Why are you so assured? 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 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. You have an entity at 1.3 times price to writing, I agree on CASA and all, but that will fall in place, So definitely a huge overweight and a vast wealth creating the chance for investors.
If you have HDFC Bank in your portfolio, will you sell it and buy Capital First?
Firmly, 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 coming 5 years.