Tuesday, June 19, 2012

IDFC Stake Cut by Macquarie Bank

Dr. Rajiv B Lall,
Vice-Chairman & Managing Director,

By Staff Reporter:
08:36 PM IST, Tuesday, 19th June 2012

Infrastructure Development Finance Company Ltd (BSE: 532659, NSE: IDFC) counter in BSE on Tuesday witnessed a massive sell of 80 lakh shares by the FII, Macquarie Bank Ltd.

The deal was disclosed at Bombay Stock Exchange after trading closed on Tuesday.

Macquarie Bank raised Rs. 102.04 crore through the offloading which was executed at Rs. 127.55 a share.

As of Q4 end, the Australian FII held 197.67 lakh shares in IDFC, amounting to a 1.31% stake in the leading infrastructure finance major.

Tuesday’s sell by Macquarie amounts to 0.53% stake in IDFC, and is 40.47% of its shares in the company, if this FII has not transacted in the counter since Q4 end.

There were no major counter-party buyers on Tuesday, buying more than 0.50% stake in the company.

Interestingly, Macquarie Bank seems to have traded reasonably well in the stock during the whole of FY’12, with it buying IDFC in Q1 and Q2 when the share was cheaper, but selling in Q3 when the scrip nosedived. But in Q4 when the IDFC scrip again started resurrecting from its 52-Week Low, Macquarie had accumulated the scrip.

In Q4, the scrip had rallied rapidly, from its 52-Week Low of Rs. 90.25 to Rs. 160.80, which is a gain of over 78% in around one-and-a-half months.

Whereas the earlier buys/sells by Macquarie were of smaller quantities, Tuesday’s larger sell reveals that Macquarie doesn’t want to take more chances, and is booking profit on more than 40% of its holdings.

On the fundamental side, IDFC had an overall good year in FY’12 with consolidated revenue growing by 28.64% and net profit rising by 21.24%. However, in the most recent Q4, a slowdown is evident with consolidated bottomline slipping quarter-on-quarter, while topline has improved by only 4.61% sequentially.

Due to its core business model being tied with the fortunes of the trouble-stricken infrastructure space, like large power projects, IDFC is facing a challenging operating environment. 

The financing company and its stock needs an improvement in the economy as well as decisive policy developments favouring large infra projects, for it to outperform again. The recent decision by RBI to skip an expected interest-rate cut is also not helping IDFC.

Government of India is the largest shareholder in IDFC with a 17.28% stake, followed by large holdings by Sipadan Investments (Mauritius) and LIC of India. 

Other notable holders include Actis Hawk, Flagship Indian Investment Company (Mauritius), Housing Development Finance Corporation (HDFC), Vanguard, JF India Fund, and Government of Singapore.

The stock is noted for its large equity base of nearly Rs. 1715 crore, and high institutional holding of over 83% (including direct GoI stake). FIIs hold almost 49% in the company, while DIIs hold nearly 35%. Non-Institutional or retail holding is less than 17%.

The high institutional holding is also because of IDFC being considered as an ideal proxy play on the Indian infrastructure space.

On Tuesday, IDFC closed trade in BSE at Rs. 129.75, up by 1.61%, in a market whose key Sensex index was up by 0.92%.