Neutral IDFC First Bank; target of Rs 80: Motilal Oswal

Motilal Oswal's research report on IDFC First Bank

IDFC First Bank (IDFCFB) reported 2QFY26 PAT of INR3.5b (up 76% YoY/ down 24% QoQ, in line). NII grew 7% YoY/3.6% QoQ to INR51.2b (in line). NIMs declined 12bp QoQ to 5.6%. Opex grew 13% YoY to INR51.2b (in line). Net advances rose 20% YoY/5.5% QoQ. Deposit growth was robust at 24% YoY/4.5% QoQ, with CASA mix improving to 50.1% (up 210bp QoQ). GNPA/NNPA ratios declined by 11bp/3bp QoQ to 1.86%/0.52%. PCR ratio was stable at 72.2%. We fine-tune our estimates for the bank and expect a healthy CAGR of 20% in loans and 63% PAT during FY25-28E. We estimate RoA/RoE of 1.0%/9.3% for FY27E. Retain our Neutral rating with a TP of INR80, based on 1.4x FY27E ABV.

Outlook

We fine-tune our estimates for the bank and expect a healthy loan CAGR of 20% and PAT CAGR of 63% over FY25-28E. We estimate RoA/RoE of 1.0%/9.3% for FY27E and retain our Neutral rating with a TP of INR80, based on 1.4x FY27E ABV.