Anand Rathi recommended hold rating on IDFC First Bank with a target price of Rs 37 in its research report dated July 16, 2020.
Anand Rathi 's research report on IDFC First Bank
The erstwhile IDFC Bank, a subsidiary of IDFC Limited which got its banking license from RBI in 2014 following which it then demerged its infrastructure assets to form the new IDFC Bank. The bank then continued its legacy portfolio of assets to grow as an infrastructure financier cum bank. On the other side, Capital FIRST Limited, a mostly retail consumer loan financing NBFC came up with a zero cost financing model for consumers attracting & creating its own set of loyal customers but lagging the traditional sources of funding enjoyed by scheduled commercial banks (CASA deposits). Today, after an year since the merger, the IDFC FIRST Bank is competing with other larger peers in order to carve out its separate market share in the retail lending business and emerge as a retail customer services focussed bank. We see a massive change in the portfolio mix of the bank underway re-establishing our faith on the CEO & MD Mr V. Vaidyanathan’s ability to make stand another gem in the retail lending business.
However, going by the banks performance, book size, experienced management team as well as the fact that the expected defaults due to corona crisis have been well provided in advance, we assign a P/Adj. BV of 1.2 to arrive at a target price of Rs 37 per equity share and recommend BUY for IDFC FIRST Bank.
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