Neutral IDFC First Bank; target of Rs 83: Motilal Oswal

Motilal Oswal's research report on IDFC First Bank

IDFC First Bank (IDFCFB) reported a 1QFY25 PAT of INR6.8b (-11% YoY, in line) dragged down by elevated provisions. NII grew 25% YoY to INR46.9b (in line), while margin contracted 13bp QoQ to 6.22%. Opex grew 21% YoY to INR44.3b (5% better than MOFSLe). C/I ratio thus eased to 70.2%. Net advances rose 21% YoY/4.1% QoQ. Deposit growth was also healthy at 36% YoY/4.5% QoQ, with CASA mix moderating 60bp QoQ to 46.6%. We cut our earnings by 11%/5% for FY25E/26E, and estimate an FY26 RoA/RoE of 1.1%/12.0%. Reiterate Neutral with a revised TP of INR83 (premised on 1.5x FY26E ABV).

Outlook

We cut our earnings by 11%/5% for FY25E/26E, and estimate an FY26 RoA/RoE of 1.1%/12.0%. Reiterate Neutral with a revised TP of INR83 (premised on 1.5x FY26E ABV).