Buy IDFC First Bank; target of Rs 75: 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 809, with total funded assets of Rs.1,60,599cr. Net Interest Income (NII) reported a growth of 35% on a YoY basis, with strong growth in both advances and deposits. Cost-to-income (C-I) ratio is expected to improve further, taking ROE above 14% by FY25. The bank has been successful in shifting its advance mix through retail focus and has made a considerable reduction in its corporate/infrastructure book. Asset quality improved further with GNPA/NNPA at 2.51%/0.86% compared to 2.96%/1.03% during previous quarter. Provision Coverage Ratio (PCR) improved to 80.3%.

Outlook

We value the stock at 1.6x Adj. BVPS of FY25E with a target price of Rs.75 and recommend Buy rating.