After spinning off IDFC Bank, IDFC as a promoter holds 52.94% of IDFC Bank.
(Source: IDFC Bank shareholding pattern as of Oct 15, 2016)
As of Oct 26, market cap of IDFC Bank is Rs. 268 billion.
52.94% of that is Rs. 142 billion.
Thus IDFC's market cap should ideally be Rs. 142 billion PLUS value of businesses not under IDFC Bank (e.g. private equity business, mutual fund business,etc)
However, as of Oct 26, market cap of IDFC is merely Rs. 112 billion.
Is this a case of undervaluation of holding company post spin-off?
Disclaimer: Author holds shares of both IDFC and IDFC Bank. This is not a stock investment recommendation. Always do your own research before investing.
(Source: IDFC Bank shareholding pattern as of Oct 15, 2016)
As of Oct 26, market cap of IDFC Bank is Rs. 268 billion.
52.94% of that is Rs. 142 billion.
Thus IDFC's market cap should ideally be Rs. 142 billion PLUS value of businesses not under IDFC Bank (e.g. private equity business, mutual fund business,etc)
However, as of Oct 26, market cap of IDFC is merely Rs. 112 billion.
Is this a case of undervaluation of holding company post spin-off?
Disclaimer: Author holds shares of both IDFC and IDFC Bank. This is not a stock investment recommendation. Always do your own research before investing.
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