IDFC’s March quarter net profit doubles

IDFC’s March quarter net profit doubles

Mumbai: Profit at private sector non-banking financial company Infrastructure Development Finance Co. Ltd (IDFC) almost doubled in the March quarter, riding on higher demand for infrastructure funding.

Fees from advisory, investment banking and asset management businesses also helped add to earnings. IDFC’s core infrastructure lending business did better than last year as funding demand from firms rose.

Net profit rose 96.25% to Rs228.11 crore from Rs116.23 crore a year earlier as profit from its main lending activity increased to Rs300.66 from Rs166.93 crore.

The company also earned Rs9.46 crore from activities other than its core business. IDFC had made a loss of Rs1.59 crore from the other businesses last year.

Its board proposed a dividend of Rs1.50 per share. The firm approved tier I and II capital of Rs3,500 crore to meet needs in the next one year.

Suresh Ganapathy, head of Macquarie Securities Group’s financial research team, said the increase in demand for funds, though positive, will continue to force the firm to raise funds and dilute equity.

“The loan pipeline is strong and the margins are good, but the company’s stock is already trading at a premium, with the return on equity capped at 16%," he said. “They will have to continue to raise capital to ensure that there is no adverse impact on the ratings."

On the cost side, employee costs rose almost three times to Rs144.56 crore, from Rs48.80 crore a year earlier.

IDFC officials were not available for comment.

The IDFC stock dropped 2.81% to end Tuesday at Rs164.55 a share, while the benchmark Sensex shed 0.31%.