ICICI Direct is bullish on IDFC First Bank has recommended buy rating on the stock with a target price of Rs 25 in its research report dated May 04, 2020.
ICICI Direct's research report on IDFC First Bank
In an exchange notification, IDFC First Bank has informed exchanges that its board has approved raising of Rs 2000 crore equity capital by issuing ~86.24 crore shares through preferential route at Rs 23.19/share. Promoter IDFC Ltd will subscribe to ~34.5 crore shares maintaining its holding at 40%. Other investors include ICICI Prudential Life Insurance (~25.87 crore shares), HDFC Life Insurance (~8.6 crore shares), Bajaj Allianz Life Insurance (~8.6 crore shares) and Dayside Investment, an affiliated entity of Warburg Pincus (~8.07 crore shares).
Given the asset mix and the current lockdown scenario, trend in asset quality and management commentary on the business outlook continue to remain key monitorables. Restructuring of balance sheet underway has continued with increase in run rate of low cost deposits. Raising capital is positive for the bank as it instils confidence. However, it also delays our return ratio target. Thus, we value the bank at ~0.8x FY22E ABV with a revised target price of Rs 25. We maintain BUY recommendation.
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