IDFC is looking good at current levels of 128 and one can initiate a buy position in IDFC with a long term view. Since I had already discussed the results of IDFC previously, Im going to move directly to valuations. IDFC has posted an EPS of 8.7 for FY11 which means that the stock is trading at a P/E multiple of 14.7 on the current stock price of 128. Around 8 months back if you see, IDFC was trading about 200+ when we did not even have the FY11 figures, it was all estimates. IDFC then used to trade around 24-25 kind of P/E for FY11 earnings estimates and today it is trading even below 15?

On top of that, IDFC is expected to post a 25 – 30% kind of growth for FY12, which takes the expected EPS for FY12 to around 11. This brings us to a one year forward P/E multiple of 11.6 which is very cheap if you compare to where it was trading in 2010. I feel IDFC has the potential to get a considerable re rating as I don’t believe that by any chance IDFC is going to enjoy such low P/E multiples. IDFC should give you a lot of returns if held for a long period of time. Brokerages estimate a good growth in the next year FY13 as well, so this stock can clearly be held from a two years perspective as well.

I feel that one can initiate a BUY on IDFC at current levels and look for a target price of 180 – 200 from one year perspective.

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