Buy IDFC First Bank; target of Rs 51: Geojit

Geojit's research report on IDFC First Bank

IDFC First Bank, founded by the merger of erstwhile IDFC Bank and erstwhile Capital First on December 18, 2018. At present, the bank’s total number of branches stands at 651, with a total funded assets of Rs.1,37,663cr. Net Interest Income (NII) reported a growth of 26% on a YoY basis with strong business growth while Net Interest Margin (NIM) stood at 5.89% in Q1FY23. Bank has been successful in shifting its advance mix with retail focus and has made a considerable reduction in its corporate/ infrastructure book. Asset quality improved with GNPA/NNPA at 3.36%/1.30% compared to 3.70%/1.53% during previous quarter. Provision Coverage Ratio (PCR) improved to 72.2%. Management has provided credit cost guidance of 1.5% for FY23. Collection efficiency has surpassed pre-covid levels.

Outlook

We value the bank at 1.4x Adj. BVPS of FY24E with a target price of Rs.51 and maintain our Buy rating.

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