Neutral IDFC First Bank; target of Rs 73: Motilal Oswal

Motilal Oswal recommended Neutral rating on IDFC First Bank with a target price of Rs 73 in its research report dated October 27, 2024.

Broker Research

October 28, 2024 / 20:42 IST

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Motilal Oswal's research report on IDFC First Bank

IDFC First Bank (IDFCFB) reported 2QFY25 PAT of INR2b (73% YoY decline, significant miss to MOFSLe) due to a spike in provisions. NII grew 21% YoY to INR47.9b (in-line), while margin moderated 4bp QoQ to 6.18%. Opex grew 17.7% YoY to INR45.5b (inline). C/I ratio stood at ~70%. Net advances grew 20.7% YoY (6.2% QoQ) while deposits grew 30.6% YoY (6.6% QoQ), with CASA mix improving 230bp QoQ to 48.9%. GNPA ratio increased 2bp QoQ to 1.92% while NNPA ratio improved 11bp QoQ to 0.48%. Credit cost was higher, primarily due to the prudent provisioning buffer of INR5.68b. We cut our earnings by 18%/5% for FY25E/26E and estimate FY26E RoA/RoE of 1.0%/11.0%. Reiterate Neutral with a revised TP of INR73 (premised on 1.4x FY26E ABV).

Outlook

We cut our earnings by 18%/5% for FY25E/26E and estimate FY26E RoA/RoE of 1.0%/11.0%. Reiterate Neutral with a revised TP of INR73 (premised on 1.4x FY26E ABV).

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