As expected RBI went ahead with it rate hike. 25 bps this time. It appears industry is concerned about continued rising input costs. Analysts are equally apprehensive that interest rate hikes may continue for some more time and this is not the last that we have seen.
Stock Idea :
IDFC collapsed in the past few days falling from Rs 142 to 120. While overall market had it toll on the share, it appears some news on Govt's thinking to regulate NBFCs contributed to the collapse. NBFCs are non Banking finance companies and there are a number of types each with its own lending/borrowing priorities/rates/target groups etc. There may be merit in Govt's thinking for regulating their margins etc.
Now, IDFC, is not likely to be affected ( impact on margins i.e.). It is involved in infrastructure financing and operating in a competitive environment. Besides due to infrastructure being given special treatment, its able to benefit from high growth.
Mr Vikram Limaye Executive Director IDFC, appearing on CNBC has expressed expectations of a loan growth of 20/25% this financial year and a doubling of loan portfolio in 3 years. Enviable.
At present level the stock is at an attractive valuation and can be expected to rebound once situation gets clearer on the NBFC regulation front.
Disclosure : I have IDFC in my portfolio and intend to add more at curent levels.
Happy investing
Basudev
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