Motilal Oswal has recommended a neutral rating on Infrastructure Development Finance Company (IDFC) with a price target of Rs 122 in its report dated September 9, 2009.
"We expect earnings CAGR of 21% over FY09-11 driven by 80%+ CAGR in asset management profits and 35% CAGR in broking/IB profit. IDFC can deliver 18-20% RoE once it leverages its net worth to 6-7x. This is a long drawn process and would require strong capital markets environment to continue. The current valuation at 2.4x FY11E consol. BV and 17x FY11E consol. EPS discount this RoE expansion. Our SOTP is Rs 122," says Motilal Oswal's report.
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