IDFC First Bank shares gain 6% after Investec upgrades stock to 'Buy'

IDFC First Bank

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26 Aug, 2025 12:21

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IDFC First Bank shares jumped nearly 6 percent on July 1 as investors cheered a positive brokerage note by Investec. The shares of the company extended gains for the third consecutive day to close at Rs 77.10 apiece.

Earlier during the day, IDFC First Bank shares had hit an intraday high of Rs 77.39 apiece. This is the highest level seen by the stock is nearly 11 months.

Investec upgraded its rating for the shares of the Mumbai-based lender to 'Buy', according to a note cited by CNBC-TV18. The brokerage also hiked its target price for the stock by 38.5 percent from Rs 65 apiece to Rs 90 apiece. The latest target price implies an upside potential of nearly 17 percent from the current market price.

Investec sees IDFC First Bank's Core Pre-Provisioning Operating Profit (PPoP) to increase at a Compounded Annual Growth Rate (CAGR) of 29 percent between financial years 2025 and 2028, the report said. It added that this will be aided by an 80-basis points reduction in the lender’s cost-to-assets.

Further, a 90 basis points decline in credit costs during the period may help ensure 1.3 percent RoA by financial year 2028, as against 0.5 percent reported last year, the brokerage further said, adding that its core earnings-per-share growth trajectory seems compelling.

IDFC First Bank shares surged over 7 percent in the past five days, and over 12 percent in the past one month. The stock has jumped over 20 percent in 2025 so far.

IDFC First Bank had reported a net profit of Rs 304 crore for Q4 FY25, marking a 58 percent decline from the Rs 724 crore net profit reported in the year-ago period. The fall in quarterly profits was primarily driven by elevated provisions linked to stress in the microfinance portfolio.

Customer deposits grew by a robust 25.2 percent year-on-year to Rs 2,42,543 crore, with retail deposits increasing by 26.4 percent to Rs 1,91,268 crore. Net Interest Income (NII) grew 9.8 percent year-on-year to Rs 4,907 crore for Q4 FY25. For the full year, NII increased 17.3 percent year-on-year. Net Interest Margin (NIM) on AUM stood at 5.95 percent for Q4 FY25, down 9 basis points sequentially, largely due to the contraction in the microfinance business. The full-year NIM was at 6.09 percent.

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