Is the worst over for IDFC First Bank? Fraud-hit lender's shares rise over 3% to hit four-day high

Is the worst over for IDFC First Bank? Fraud-hit lender's shares rise over 3% to hit four-day high

• IDFC First Bank shares rose 3% after Rs 590-crore fraud case
• Four arrested for bank fraud, including former staff member
• Analysts say fraud impact is under 2% of bank's net worth

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Shares of IDFC First Bank rose over 3% on February 26 days after it was rocked by a massive Rs 590-crore fraud by its employees.

At 2 pm on February 26, IDFC First Bank shares were trading 3.3% higher at Rs 72.52 apiece.

Analysts now believe that the sharp sell-off has already priced in the worst-case impact on earnings and regulatory risks. While sentiment may remain fragile in the near term as investors await more clarity, they do not see this episode derailing the bank’s medium-to-long-term growth story.

Meanwhile, Haryana's State Vigilance and Anti-Corruption Bureau said on Wednesday that it has arrested four people in connection with the Rs 590-crore IDFC First Bank fraud case.

Among those arrested, two are former IDFC First Bank employees while the other two are owners of a partnership firm, PTI reported quoting officials.

The arrests were made on Tuesday evening as part of the ongoing investigation of the IDFC First Bank fraud case.

Earlier, The Indian Express had reported that authorities were on the hunt for a Chandigarh-based woman and her brother in connection with the scam after “suspicious” transfers worth nearly Rs 100 crore were made to a firm owned by them.

Chokkalingam G, founder of Equinomics Research, said this reset broadly matches the expected financial impact, as the bank is likely to make a 100 percent provision for the amount this quarter. This could result in either a marginal loss or a small profit in Q4, compared with a net profit of Rs 503 crore in Q3FY26.

“The bank’s net worth stood at Rs 41,000 crore at the end of December, and the fraud impact is less than 2 percent of this. In that sense, the stock has been punished a bit more than required. High-risk investors can consider buying the stock with a medium-to-long-term view,” he said.

Emkay maintained an ‘Add’ rating but cut its target price to Rs 80 from Rs 95, citing risks of partial withdrawals from other government accounts and possible second-order impact on business momentum and margins.

The stock had hit 20% lower circuit on Monday.

On February 25, the lender said it has returned the money even as investigation is ongoing.

"Even though the investigation in the matter is ongoing, we have paid out 100% of the principal and interest to the relevant departments of Haryana Government as claimed, which works out to a net amount of Rs 583 crore. The departments have sincerely thanked and appreciated the Bank for the positive approach, professional manner, and speedy and principle-based resolution," the lender said.

On February 24, Haryana Chief Minister Nayab Singh Saini informed the State Assembly that the state government had recovered nearly Rs 556 crore owed to it in the case.