Neutral IDFC First Bank; target of Rs 85: Motilal Oswal

Motilal Oswal's research report on IDFC First Bank

IDFC First Bank (IDFCFB) reported 3QFY24 PAT of INR7.2b (up 18.4% YoY, 8% miss) due to higher provisions and opex. NII grew 30.5% YoY, led by healthy loan growth and improvement in margins (up 10bp QoQ at 6.42%). Other income grew 31.6% YoY to INR15.2b. Opex grew 33.5% YoY to INR42.4b, resulting in a 115bp QoQ increase in the C/I ratio to 73.1%. Loan book (incl. credit subs) grew 27%YoY/4.2% QoQ. Deposit growth was robust at 37% YoY, with CASA mix increasing 40bp QoQ to 46.8%.

Outlook

We estimate the bank to deliver a ~30% earnings CAGR over FY24-26, with RoA/RoE of 1.3%/13.5% in FY26. Maintain Neutral with a revised TP of INR85.