IDFC first Bank AGM 2020, highlights and key points ~ Shareholder Awareness Program

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IDFC first Bank AGM 2020, highlights and key points



IDFC first bank AGM 2020

V. Vaidyanathan in the 6th AGM of IDFC first bank , 2020 held through online mode

Article published as on Friday, 31st July, 2020 at 8:00 a.m.   


30/7/20 Thursday, 11:00a.m


The AGM was started with Satish Gaikwad and then V. Vaidyanathan afterwards a presentation was shown, Mr. Vaidyanathan showed the presentation why the bank posted continuous loses quarter after quarter and also showed the graph of performance of capital first attached below, indicating IDFC first bank may also start like this with losses and negligible profits and then compounding profits.
V. Vaidyanathan asked shareholder to be candid and ask all their queries in a straight forward manner. Even I asked my questions and was answered subsequently, lastly Vaidyanathan gave chance to other managerial personnel’s to say a few words as well.
The AGM was not as good (conducted on cisco WebEx) lots of technical difficulties.

Let’s begin with the highlights and key points of the AGM.

Presentation by management:

profitability path graph for IDFC first bank presented in its AGM 2020


This graph in the picture shows initial years of capital first and even after joining by Vaidyanathan the company posted losses for 2 years. He was trying to convey that even in IDFC first bank the time is tough and losses are being posted, the bank has used this time to strengthen itself and build a solid base for fantastic growth. He also indicated that investors shall maintain patience as good time is yet to come for IDFC first bank.



Mr. V. Vaidyanathan clarified that he sold his shares recently at lower prices to avoid margin calls.

He explained the story how he took debt to buy shares and when the price were going down he had to sell just to prevent margin call and clear off debt. He has learned the lesson not to leverage which could result in forced selling

Comments on Morgan Stanley’s target of rs10 ( this link says rs.15)

He assured that the analyst have provided their opinion and this does not factor in the strong base and excellent corporate governance of IDFC first bank.
Also he has never called Morgan Stanley to talk about such reports and ask why the low target was given
Mr. Vaidyanathan was very confident in the bank and even said that Morgan Stanley would themselves one day upgrade the price target of IDFC first bank much higher than the price today.

Won’t open a twitter account
The CEO was asked to create twitter account as it would help better connect with people, he replied he is not interested as he feels social media would take a lot of his time, and it won’t be possible to read/reply every comments.

Security first policy. The bank has focused on creating very high level of security for depositors, one may think they are offering high interest rates so they may be risky, but their agenda is very clear, Safety first. Seeing the confidence of management even I would recommend people to avail the benefits of 6% to 7% interest rates, but if someone asked shall I invest in shares, I would be neutral as this company has disappointed investors (not destructed wealth, but has not created wealth either) I would wait for performance in upcoming results. Also they said they will continue the higher interest rates for some time.
Talks and discussions on reverse merger with IDFC ltd were also discussed, it may or may not happens, so the possibilities are open.

Apart from this the management sounded very confident of the future of the bank,
The live OaVM meeting started at 11:00 a.m. and ended at 2:30 p.m. lasting 3 hours 30 minutes.

Conclusion/ my understanding
The management is very professional, conservative (a bit too conservative in fact), confident for future growth.

After many quarters we have seen some profits of the books of accounts giving us (investors) a ray of hope that yes now the profits will start compounding from here on. (Can’t be sure about it, will have to wait few more quarters and observes developments)

Also if some news of reverse merger comes in near future, I would like to be invested in IDFC ltd (its parent and holding company)

Final comment: I feel currently it’s better to open savings account and earn 6% rather than investing into equity of this bank, as an investor we have been disappointed, I personally would like to observe few more quarters of performance.


 Stock code: IDFCFIRSTB
Price: 27.00 Rs.
Market cap: 15315.33 (crores)

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2 comments

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Vansh
admin
July 31, 2020 at 4:26 PM ×

What was his answer for huge capital size of the bank and IDFC LTD wanting to sell its stake?

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Unknown
admin
August 3, 2020 at 7:28 PM ×

He explained that huge capital size should not be something to worry about, and relating to stake sale by Idfc ltd what i understood was that, parent is supposed to maintain 40% stake in bank from 5 years of obtaining license. Now this term is ending in october 2020, also the idfc ltd has most probably took debt to invest in shares of idfc first bank, now after the 1st oct 2020, idfc ltd would most probably sell some of the shares to clear of the debt it had taken to invest in shares. Its upto idfc ltd management to decide what to do ultimately.

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