|Banking Hopefuls : Share Price Movement in last One Month|
|Structure of Dead Monk’s Portfolio|
|9 Stocks in Dead Monk’s Portfolio|
During the same period, profits have grown from 180 crores to 1600 crores at rate of 27% plus.
Earnings (per share) have moved up from 1.8 to 10.3 in 2012. In line with EPS, dividends have started increasing in recent past and now (in 2013) stand at Rs 2.6 per share. In last 5 years (barring 2009), company has continuously increased its dividend per share (1.2, 1.2, 1.5, 2.0, 2.3, 2.6).
|Earnings & Dividends Per Share (2003-2012)|
The dividend payout ratio has also stabilized in the band of 20-23%, which is decent considering the high growth rate of company’s business. A detailed comparison between EPS, DPS and their respective growth rates can be found in table below-
|Detailed EPS & DPS Data – Growth Rates & Assumptions|
IDFC is a financial institution and hence it makes more sense to analyze company’s Price to Book Value to gauge how over- or undervalued the company is.
Price/Book Value & P/E Ratio Analysis
Company has grown its book value from 16 to 81 in last ten years. That’s a CAGR of more than 20%.
|Book Value Per Share (2003-2012)|
We analyzed historical data to check the P/BV multiples at which IDFC has traded. Average P/BV after listing (in 2005) for IDFC stands at close to 2.3. Also it has oscillated in a P/BV range of 1.0 to 5.0. At present, the stock is available at a P/BV of 1.6. That itself points to a 30% undervaluation from historical averages perspective.
If you look at Price to Earnings multiple too, average PE commanded by IDFC is close to 16. The stock currently trades at a PE of less than 11 (TTM). And if you are enterprising enough to consider future earnings, then stock is available at a forward PE of 9.2 (FY 14) & 7.7 (FY 15)! And a PE of 8 is considered apt for a no-growth company. 🙂
|P/BV Comparison – Current, Historical Average & Estimated (2014, 2015)|
|P/E Ratio Comparison – Current, Historical Average & Estimated (2014. 2015)|
The company, though well managed and growing at a decently fast pace, seems to be undervalued. We have not analyzed management, business, etc as this post was more to do with valuations based on simple historical parameters. But being headed by Deepak Parekh and his team, it is assumed that management would be doing a decent job. In case you are interested in understanding more about the business, management and other factors, we suggest a simple Google search. It will throw a plethora of brokerage reports analyzing the same. You can also access company’s latest Annual Report here.
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|Click to enlarge|