IDFC vs AU Small Finance Bank Which Outperforms?

IDFC and AU Small Finance Bank are two prominent players in the Indian banking and financial services sector. IDFC Limited, previously known as Infrastructure Development Finance Company, focuses on providing financial services for infrastructure projects. On the other hand, AU Small Finance Bank is a newer entrant in the market, catering to the micro, small, and medium enterprises (MSME) sector. Both companies offer unique opportunities for investors looking to diversify their portfolio in the banking industry.

IDFC or AU Small Finance Bank?

When comparing IDFC and AU Small Finance Bank, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between IDFC and AU Small Finance Bank.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. IDFC has a dividend yield of 0.92%, while AU Small Finance Bank has a dividend yield of 0.17%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. IDFC reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, AU Small Finance Bank reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with IDFC P/E ratio at 19.93 and AU Small Finance Bank's P/E ratio at 24.16. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. IDFC P/B ratio is 1.29 while AU Small Finance Bank's P/B ratio is 2.74.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, IDFC has seen a 5-year revenue growth of -0.85%, while AU Small Finance Bank's is 2.82%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IDFC's ROE at 8.92% and AU Small Finance Bank's ROE at 13.65%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹107.36 for IDFC and ₹586.45 for AU Small Finance Bank. Over the past year, IDFC's prices ranged from ₹104.50 to ₹129.70, with a yearly change of 24.11%. AU Small Finance Bank's prices fluctuated between ₹553.70 and ₹813.40, with a yearly change of 46.90%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.