Important note - Still Indian Markets are directionless and indecisive due to which any further market correction may bring some more pressure on all researched stocks mentioned in following subsections.
The market volatility situation is for short term duration and in long term the markets will recover as Indian companies are having good fundamentals and good growth prospects.
Taking into consideration current market situation it is advisable to buy stocks in steps rather than buying in bulk in single trade.
Infrastructure Development Finance Company Ltd
(Researched date - Feb 2009)
What IDFC do
IDFC lend (provide loan) to companies engaged in infrastructure development, telecom, energy like power generation etc.
In fact, IDFC finances on an average 25 per cent of the total private sector infrastructure projects in the country. IDFC’s project financing is its core business and energy, transportation, telecom and IT (ETT), are its key customer segments accounting for around three-fourths of the loan book.
What is company’s scope?
1. There is no doubt that India needs to invest huge amount of money towards creation of new infrastructure, given that lack of
quality infrastructure has proved to be a stumbling block for the country not reaching its optimum growth rates. Even in these
challenging times, the government’s stimulus packages focus on increasing infrastructure spending, as it would help sustain
higher growth rates, and would create employment opportunities. That India is estimated to spend around $450 billion on
infrastructure in the eleventh five-year plan (an increase of 2.3 times from the tenth five-year plan), itself speaks of the
opportunities therein.
This is going to benefit the IDFC at the large extent
2. A planned target by the government to add 78,000 mw of power generation capacity in the 11th 5 year plan (2008-2012) and
greater participation of private players in power projects would provide opportunities for IDFC in energy space.
3. Out of its total lending, exposure to energy space is the highest (around 37 per cent).
Increased PPP (public-private partnership) in roads segment along with privatisation and modernisation of airports would
ensure enhanced financing opportunities in the transportation division going ahead. Likewise, the robust growth in the
telecom sphere is also throwing up financing opportunities. Overall, with ETT segment’s proposed layout accounting for 75%
of total spending in the current five-year plan would ensure adequate demand for funding from these sectors.
Company’s other potential businesses
Apart from the core business, other segments like investment banking, asset management and principal investments also contribute prominently to revenues.
Expected Returns
Taking into consideration above all factors and parameters it is quite obvious that IDFC is going to benefit at huge extent but in long term.
CMP - Rs.55
Holding period - 2 to 5 years or even longer will provide excellent returns.
Returns - Returns are reaped based on your holding period
From date to 2-3 years holding period - 50 to 70%
From date to 3-4 years holding period - 70 to 90%
Taking into consideration Rs.55 as buying price following are the returns
160% Target acheived in month of 19 May 2009. It went high till Rs.143 (Updated - May 2009)
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