IDFC’s Asset Quality Takes A Hit In June 2013 Quarter

IDFC announced its June 2013 quarter financial results, wherein its performance was better than the street’s estimates. For the period, the company’s consolidated Profit After Tax (PAT) stood at Rs 560.73 crore as against that of Rs 381.70 crore posted in June 2013 and Rs 528.85 crore in March 2013.

On the operational front too, IDFC has put in healthy numbers. Its gross loan book has grown by 13 per cent to Rs 57600 crore from Rs 50157 crore in June 2012. What’s more, the company has managed to sustain its Net Interest Margins (NIM) at 4.10 per cent.

However, a major worry is the increase in its non-performing assets (NPAs). As on June 30, 2013, the Gross NPAs stood at 0.32 per cent and Net NPAs stood at 0.20 per cent as compared to 0.32 per cent and 0.14 per cent in June 2012. This is clearly on the higher side, and is quite alarming.

Apart from this, another worrying factor is the concentration of advances towards the energy sector. Higher advances in the energy sector on a cumulative basis as also on the outstanding disbursement front could impact the company’s performance going ahead.

On the other business segment, the assets under management (AUM) for IDFC Private Equity stand at Rs 4457 crore, those for IDFC Project Equity are at Rs 3837 crore and for IDFC Mutual Fund are at Rs 40327 crore – the total adding up to Rs 48620 crore. This has seen a marginal increase, but it is still early to comment on the AUM front as the implications will show up in the long term.