IDFC Share price and Fundamental Analysis

Company History

IDFC Limited (Erstwhile, Infrastructure Development Finance Company Limited) is a financial conglomerate and is registered with Reserve Bank of India as an NBFC. It is a Holding Company mainly holding investment in IDFC Financial Holding Company Limited (IDFC FHCL) which is a non-operative financial holding company. IDFC FHCL in turn holds investments in IDFC FIRST Bank Limited (IDFC FIRST Bank) and IDFC Asset Management Company Limited (IDFC AMC). IDFC AMC is also registered as a Portfolio Manager with the Securities and Exchange Board of India (SEBI).

IDFC's main subsidiary is IDFC Bank. Besides banking, it also has investments in various financial services businesses such as Asset Management (both public markets and private markets), Institutional Broking & Research, and Infrastructure Debt Fund. All these businesses are carried out through independent subsidiaries. IDFC holds all these investments under IDFC Financial Holding Company Limited. The network of IDFC Bank as on March 31, 2018, comprises 150 branches, 387 Corporate Business Correspondent (BC) branches, 85 ATMs and 17,474 customer access points'. Of the 150 branches, 50 branches are in the top 35 cities in India. The remaining 100 semi-urban and rural branches are across Madhya Pradesh, Karnataka, Andhra Pradesh, Gujarat, Rajasthan, Tamil Nadu, Tripura and Meghalaya.

Infrastructure Development Finance Company Ltd was incorporated on January 30, 1997 as a public limited company with their registered office at Chennai. In the year 1994, the Department of Economic Affairs, MoF in recognition of the need to develop the country's infrastructure, established an Expert Group on Commercialization of Infrastructure Projects under the chairmanship of Rakesh Mohan. The group reviewed the existing state of infrastructure in the country, including the state of corporate debt market to provide long-term funds to infrastructure projects, and recommended the need for a specialized financial intermediary for funding infrastructure projects. Thus the company was formally incorporated. The company commenced their business activities on June 9, 1997.

In the year 1998, the company registered with the Reserve Bank of India (RBI) as a Non Banking Financial Company (NBFC). In the year 1999, the company was notified as Public Financial Institution. In the year 2000, the company was registered with the Security Exchange Board of India (SEBI) as a merchant banker and as an underwriter. Subsequently, in the year 2001, they made a registration with the SEBI as a debenture trustee. Also, the company set up Infrastructure Development Corporation (Karnataka) Ltd pursuant to a shareholders agreement between IDECK and the Governor of the State of Karnataka, HDFC and the company.

In the year 2002, the company incorporated IDFC Asset Management Company Ltd as a subsidiary company. Also, they incorporated a joint venture company, namely Uttaranchal Infrastructure Development Company Ltd with Government of Uttarakhand. In the year 2003, India Development Fund was formed, in which the company was a sponsor investor. In August 2005, the company's equity shares were listed on NSE and BSE pursuant to an initial public offering. In the year 2006, they successfully raised $450 million for their second infrastructure focused private equity fund. In June 2006, the company entered into an MoU with SBI Capital Markets Ltd for syndication of debt financing for Infrastructure projects.

During the year 2006-07, the company increased their stake in National Stock Exchange of India Ltd to 8.2% by acquiring an additional 6% stake. Also, they acquired 8.71% stake in the Asset Reconstruction Company (India) Ltd. The company along with Citigroup, India Infrastructure Finance Company Ltd and the global private equity player, Blackstone, launched a landmark USD 5 billion initiative for financing infrastructure projects in India. During the year, the company also set up IDFC Project Equity Company Ltd to manage the proposed USD 2 billion third party equity component of the 'India Infrastructure Initiative'. Also, the company acquired 33.33% stake in SSKI Securities Pvt Ltd (SSKI), which is a domestic mid-size investment bank and an institutional brokerage and research platform, with membership of the BSE and the NSE.

In May 2008, the company entered into asset management by acquiring the AMC business of Standard Chartered Bank in India, namely Standard Chartered Asset Management Company Pvt Ltd and Standard Chartered Trustee Company Pvt Ltd and the acquired companies was re-branded as IDFC Asset Management Company Pvt Ltd and IDFC AMC Trustee Company Pvt Ltd respectively.

During the year 2008-09, IDFC - SSKI Ltd subscribed 100% of equity shares of IDFC Capital (Singapore) Pte Ltd, a company incorporated in Singapore for an emerging markets private equity fund-of-funds business. During the year, the company established IDFC Foundation to focus on capacity building, policy advisory and sustainability initiatives. Also, the company became a part of Nifty 50 during the year.

During the year 2009-10, the company consolidated their position as the country's leading specialist infrastructure finance company and one of the largest financiers of infrastructure in the country with most of their businesses scaling new heights. The company increased their equity stake from 80% to 100% in IDFC Securities Ltd. Also, the company along with their wholly owned subsidiary subscribed 100% equity shares of IDFC Pension Fund Management Company Ltd.

During the year, IDFC Capital Ltd subscribed 100% of equity shares of IDFC Fund of Funds Ltd and IDFC General Partners Ltd. Also, the company's 100% subsidiary, IDFC Projects Ltd acquired 51% of equity shares of Dheeru Powergen Private Ltd. In January 2009, IDFC Projects Ltd signed a MoU with Gujarat State Energy Company Ltd and Bharat Heavy Electricals Ltd (BHEL) to establish a 1600 MW Thermal Power plant at Sarkhadi based on supercritical technology. Also, they signed a MoU with Government of Gujarat to establish a 10 MW Solar Power Project.

During the year 2010-11, Jetpur Somnath Highway Ltd (earlier known as IDFC Capital Company Ltd and a direct subsidiary of IDFC) became a subsidiary of IDFC Projects Ltd. A company under the name of Jetpur Somnath Tollways Ltd was incorporated as a Subsidiary of IDFC Projects Ltd. IDFC Projects, alongwith the other companies, further floated Dheeru Powergen Ltd, which was converted from Private Limited Company to a Public Limited Company.

IDFC Asset Management Company Ltd further floated IDFC Pension Fund Management Ltd, one of the Pension Fund Managers appointed by the Pension Fund Regulatory and Development Authority (PFRDA) to manage retirement funds under the New Pension Scheme (NPS) open to individuals in the private sector, and IDFC Investment Advisors Ltd. A company under the name of IDFC Investment Managers (Mauritius) Ltd was has been incorporated as a Subsidiary of IDFC Asset Management Company Ltd.

During the year, IDFC Foundation (a Non- Profit Organisation) was incorporated as a wholly owned subsidiary company of IDFC. Further, the shares of the three Joint ventures namely, Infrastructure Development Corporation (Karnataka) Ltd (iDeCK), Uttarakhand Infrastructure Development Company Ltd (UDeC) and Delhi Integrated Multi-Modal Transit System Ltd (DIMTS), which were initially held by IDFC, was transferred to IDFC Foundation and similarly, the units of the Trust, namely India Infrastructure Initiative Trust & India PPP Capacity Building Trust which were initially held by IDFC was also transferred to IDFC Foundation.

Further during the year, Uniquest Infra Ventures Pvt Ltd was incorporated as a direct subsidiary of the company and IDFC Capital USA Inc. was also incorporated as a subsidiary company of IDFC Securities Ltd.

On 3 June 2011, IDFC and Khazanah agreed to enter into a joint venture (JV) to set up a dedicated infrastructure development company with a focus on road sector in India. Khazanah would hold 80.1% of the equity share capital in the proposed JV and the balance would be held by IDFC. Khazanah and IDFC also propose to invest in convertible instruments issued by the JV. The first investment of this JV will be in Jetpur Somnath Tollways Limited (JSTL), subject to receipt of necessary regulatory approvals and permissions, including those from the National Highway Authority of India. Khazanah is the investment holding arm of the Government of Malaysia entrusted to manage the assets held by the Government and to undertake strategic investments.

At the time of announcement of Q1 June 2011 results, IDFC on 27 July 2011 announced that its Balance Sheet size crossed Rs 50000 crore mark as on 30 June 2011.

In November 2011, SNC-Lavalin Group Inc. and the company announced a joint venture that began with an introduction by Export Development Canada (EDC). The new company, called Piramal Roads Infrastructure Ltd, will work to develop a portfolio of road assets in India.

On 9 December 2011, IDFC and Natixis Global Asset Management (NGAM) announced that NGAM has acquired a 25% stake in IDFC Asset Management Company (IDFC AMC) and IDFC AMC Trustee Company (IDFC AMC Trustee). IDFC AMC is the investment manager of IDFC Mutual Fund and is the IDFC group's asset management platform focused on retail and institutional investors in the public market. NGAM is one the largest asset managers in the world.

On 22 February 2012, IDFC informed the stock exchanges that the company has filed the Offering Circular with Singapore Exchange Securities Trading Limited (the 'SGX-ST') for listing of notes to be issued pursuant to the company's US$ 1,500,000,000 (or its equivalent in other currencies) Medium Term Notes Programme (MTN).

The name of the company was changed from Infrastructure Development Finance Company Limited to IDFC Limited with effect from 20 July 2012.

On 18 March 2014, IDFC Ltd announced the operationalization of DFID-IDFC loan programme that will support infrastructure projects in the low-income states of India. The programme was launched in October 2013.

IDFC was granted an in-principle approval by Reserve Bank of India (RBI) on 9 April 2014 to set up a new bank in the private sector under Section 22 of the Banking Regulation Act, 1949. Accordingly, a new company namely IDFC Bank, with a paid up capital of Rs 5 lakh, was incorporated on 21 October 2014 at Chennai, Tamil Nadu under the Companies Act, 2013 to carry out the business of banking. As per the terms and conditions contained in the in-principle approval and the RBI New Banking Guidelines, IDFC was required to transfer Financing Undertaking to IDFC Bank. Accordingly, the Board of Directors of IDFC at its meeting held on 30 October 2014 approved a proposal to demerge its Financing Undertaking into its wholly owned step down subsidiary - IDFC Bank under a Demerger Scheme. On December 26, 2014, the entire equity stake of IDFC Bank held by IDFC was transferred to IDFC Financial Holding Company Limited (IDFC FHCL), thereby making IDFC Bank, a wholly owned subsidiary of IDFC FHCL, which in turn, is a wholly owned subsidiary of IDFC. Pursuant to the Scheme of Demerger, IDFC Bank issued and allotted 159.40 crore-equity shares to shareholders of IDFC, thereby reducing the shareholding of IDFC FHCL from 100% to 53%.

The Capital Raise Committee of Directors of IDFC by a special resolution dated 16 September 2014 approved the allotment of 7.3 crore-equity shares at a price of Rs 137 per share, aggregating Rs 1000.10 crore to Qualified Institutional Buyers.

On 31 July 2015, IDFC announced that ahead of its transition into a bank, it plans to take additional provisions of approximately Rs 2500 crore in Q2 September 2015 against coal and gas power assets to make sure that in the aggregate, 50-60% has been provided for against stressed loan assets many of which will not be NPAs on 30 September 2015. IDFC said it plans to create these additional provisions by utilizing non-distributable special reserves that have been created over the past several years, subject to appropriate approvals. The net impact these additional provisions will be a reduction in net worth by about Rs 1600 crore.

On 20 August 2015, IDFC announced that it has entered into non-binding letter of intent with Dilip S Shanghvi and Telenor Financial Services AS for setting up a Payment Bank wherein IDFC and/or its affiliates would hold 19.99% stake. Dilip S Shanghavi is one of the successful applicants who have been awarded the in-principle approval by the Reserve Bank of India for setting up a Payment Bank.

On 4 March 2017, IDFC announced that it has decided to acquire the entire remaining stake of approximately 25% held by Natixis Global Asset Management (NGAM) in IDFC Asset Management Company (IDFC AMC) and IDFC AMC Trustee Company (IDFC AMC Trustee). The acquisition is for a cash consideration of Rs 244.24 crore. IDFC AMC is a well established SEBI registered Mutual Fund house in India, sponsored by IDFC, with average assets under management (AUM) of about Rs 57998 crore on 31 December 2016.

IDFC Group and Shriram Group signed an exclusivity agreement on 8 July 2017 to allow for due diligence and discussions to arrive at an agreement on a transaction structure and swap ratio for a strategic combination between certain businesses of the Shriram Group with IDFC Limited and IDFC Bank. However, despite best efforts, the two groups were not able to reach an agreement on a mutually acceptable swap ratio. Accordingly, the exclusivity period was terminated with effect from 30 October 2017.

On 28 April 2018, IDFC announced that IDFC Alternatives Limited, a wholly owned step down subsidiary of IDFC through IDFC Financial Holding Company Limited, has entered into a definitive agreement with Global Infrastructure Partners India, for the sale of its infrastructure asset management business. This sale will conclude on the receipt of the requisite regulatory approvals as applicable. IDFC Alternative will continue to manage Private Equity and Real Estate funds and the aforementioned sale to Global Infrastructure Partners India will not have any impact on its Private Equity and Real Estate verticals.

The Board of Directors of IDFC Bank and Capital First Limited at their respective meetings held on January 13, 2018 had approved a composite scheme of amalgamation of Capital First, Capital First Home Finance Limited and Capital First Securities Limited with IDFC Bank and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013. The share exchange ratio for the Amalgamation was approved to be 139 fully paid-up equity shares of IDFC Bank for every 10 fully paid-up equity shares held in Capital First. As on the date of this report, the Scheme has received; a. Approvals from National Housing Bank and Competition Commission of India; b. Approvals from BSE Limited and National Stock Exchange of India Limited; c. No Objection Letters from BSE Limited and National Stock Exchange of India Limited under Regulation 37 of SEBI LODR Regulations; d. No Objection Letter from RBI under RBI (Amalgamation of Private Sector Banks) Directions, 2016. IDFC Bank has filed an application with the National Company Law Tribunal (NCLT), Chennai Bench seeking its direction for convening meetings of the Shareholders and Creditors of IDFC Bank. On receipt of directions from the NCLT, IDFC Bank shall convene meetings of its Shareholders and Creditors, as may be required. Subsequent to the receipt of approval of the Shareholders and Creditors, IDFC Bank shall file a Petition with the NCLT for its final approval to the Scheme.

During the year 2018, the Bank strengthened its Wealth Management offering. It also launched its NRI Banking services to complete its liability product suite. To deepen financial inclusion, IDFC Bank has placed a special emphasis on taking its services to segments such as marginal farmers, micro enterprises and self-employed customers. To serve these segments, the Bank has designed products across the spectrum of savings, assets and payments. During the year 2019, IDFC & IDFC FHCL had entered into definitive agreement with NIIF Infrastructure Finance Limited (NIIF Fund II) to sale its entire equity stake (81.48%) held in IDFC Infrastructure Finance Limited. The Parties executed the necessary agreements on March 1, 2019. After obtaining the necessary regulatory approval, 51.48% of equity stake was transferred to NIIF Fund II in March 2019 at a consideration of Rs. 404.32 crore. Accordingly, NIIF IFL ceased to be subsidiary company of IDFC FHCL. Second tranche of the transaction was closed and IDFC FHCL received a consideration of Rs. 265.91 crores for its 30% residual shareholding and subsequent to completion of this transaction, NIIF Infrastructure Finance Limited ceased to be associate company of IDFC FHCL.

During FY20, IDFC & IDFC FHCL had entered into an understanding with Mr. Dharmesh Mehta along with other investors to sale its entire equity stake (100%) held in IDFC Securities Limited, which was an indirect subsidiary company of IDFC Limited as on March 31, 2020. On June 10, 2020, IDFC transferred/ sold equity stake in IDFC Securities Limited to the Acquirers, after obtaining all necessary regulatory approvals, at a consideration of Rs. 86 crore., where the same was informed to the stock exchanges. Accordingly, as on March 31, 2021, IDFC Securities Limited ceased to be subsidiary company of IDFC FHCL. Consequently, IDFC Securities Singapore Pte. Ltd and IDFC Capital USA which were subsidiaries of IDFC Securities Limited also ceased to be subsidiaries of the group.

During the year 2021, IDFC Securities were sold. Office premises at Naman Chambers and Windmills were sold to Champak Pragati Foundation for aggregate consideration of Rs. 20.34 crore. The AMC expanded its product range by launching the IDFC Floating Rate Fund as well as India's first Gilt Index funds - the IDFC Gilt 2027 Index Fund and IDFC Gilt 2028 Index Fund. As on March 31, 2021 IDFC held 39.98% in IDFC FIRST Bank and 99.96% in IDFC AMC. IDFC's holding in IDFC FIRST Bank further reduced to 36.60% post the QIP issue done by the Bank in April 2021.

The Board of Directors of IDFC and the Board of Directors of IDFC FHCL at their respective meetings held on April 06, 2022, had considered divestment of IDFC Asset Management Company Limited (AMC) along with IDFC AMC Trustee and had approved sale of the entire shareholding of IDFC AMC and IDFC AMC Trustee held by IDFC FHCL to a Consortium comprising of Bandhan Financial Holding Limited, Lathe Investment Pte. Ltd. (affiliate of GIC), Tangerine Investments Limited and Infinity Partners (affiliates of ChrysCapital), which concluded on 31 January, 2023. As a result of the sale, IDFC AMC and IDFC AMC Trustee ceased to be a part of IDFC Group Companies with immediate effect. Subsequently, the name of the Company changed from IDFC Asset Management Company Limited to Bandhan AMC Limited and IDFC AMC Trustee Company Limited to Bandhand Mutual Fund Trustee Limited effective on April 19, 2023.

During the year 2022-23, IDFC Alternatives Limited (Transferor Company 1), IDFC Trustee Company Limited (the Transferor Company 2) and IDFC Projects Limited (the Transferor Company 3) (wholly owned subsidiary Companies) merged into IDFC Limited (Transferee Company) through the Scheme of Amalgamation and as a result, became effective from December 09, 2022. As on March 31, 2023, IDFC Alternatives Limited, IDFC Trustee Company Limited and IDFC Projects Limited ceased to exist.

On July 03, 2023, IDFC FHCL merged into and with IDFC; and IDFC merged into with IDFC FIRST Bank and their respective shareholders through the Composite Scheme of Amalgamation, with the Share Exchange Ratio of 155 Equity Shares of IDFC FIRST Bank for every 100 Equity Shares of IDFC. i.e., 155:100.