Thread by @sagarbandodkar2

Amazon and Flipkart users must have used the pay later facility which allows you to pay for your orders after a certain time period .
@IDFCFIRSTBank had partnered with a startup which focuses on SME lending called capital float . 1/

Why I like this bank ?
As everyone knows India is a huge market and there will be a explosion of discretionary spending when per capita income will grow from $2000 -$3000 And so on in future. 2/

India In the early days was a saving economy remember our parents used to say save money and don’t spend . But as the per capita income increased the discretionary spends also increased
When the per capita income is $1000 the essential is $900 and $100 is discretionary 3/

But when the per capita income goes from $1000 dollars to $2000 💰the essential might go to $1000 but the discretionary becomes $1000 so when there is doubling of per capita income the discretionary becomes 10x and that’s when the consumption boom happened from 2008-2020 .
4/

That’s when we started consuming more soaps , bought more cars , spent on clothing and so on . Now when the per capita will go $3000 the essential might go to $1200 and the discretionary goes up to $1800 that’s a 18x jump and that’s when products like insurance and
5/

Financial services like banks play boom specially the banks which are consumption focused are major beneficiaries . Thats the savings part and from now India will move from a savings to a consumption and then to a leveraged economy.
6/

When a country moves to a leveraged economy there is a boom in consumer loans and credit cards . In USA the credit card penetration is 300% that means on a average a person has 3 credit cards and in India the penetration is 3% that means of 100 only 3 people have credit cards
7/

IDFC first bank launched its credit cards in January of 2021 and within 4 months it has issued 294775 credit cards (data as of April 2021) and they are constantly gaining market share . Right now the cards are only for existing customers but soon it will be open for others
8/

The Interesting thing is that all the cards are free for lifetime and the disruptive thing about them is the floating interest rate on revolving credit depending how I credit score of the person it varies from 9%-33% . Even 33% is less than its peers who charge 40-45%
9/

As these cards are free for lifetime we can expect co branded cards with some large e-commerce platforms or some other financial institutions just the way icici bank and axis have partnered with Amazon and Flipkart and that would give the bank even more visibility
10/

The bank has partnered with many fintech startup’s to distribute its products like one card , FamPay ,capital float etc .
IDFC first bank provides platform for startup’s for free to test out their systems Which gives us an idea that this bank has a forward looking vision.
11/

I didn’t discuss the financials of this bank as right now it will seem that it’s peers are a better investment than this bank. But the direction and vision of this bank to be a really good retail bank is totally visible .
12/

I have not discussed the financials but I’ve tried to give a qualitative perspective a 21 year old who is watching the disruptions happening around me and how I am observing the the youths spreading patterns and how the fires like them will benefit from This consumption boom
13/

Right now the ROA, ROE,ROCE are not at the levels that we expect but this is a turn around story that people must keep a track of and Mr V. Vaidyanathan who is the MD&CEO is doing a great job and I believe in his expertise.
14/

The way he turned around capital first and increased the loan book from 100 crores to 29000 crores in 7-8 years is phenomenal and that too with 1% GNPA and 0.5% NNPA that shows the power of the data driven model of this bank
15/

Investors might not make returns for 2-3 years but certainly the direction is encouraging i Would look at this bank with a 10-15 year perspective and I am pretty convinced that this bank will emerge as a tech driven retail focused giant bank in future .
Disc -invested ,not reco.