IDFC First Bank Ltd. share price target

Quarterly Update Q2FY24

We revise our rating from HOLD to BUY on the stock.

IDFC First Bank (IDFCFB) reported Q2FY24 PAT at INR 7.5bn (down 2% QoQ; ~6% miss). Despite stable NIM, the bank reported some softness QoQ in cost income and RoA due to flattish other income and continued opex. RoA stood at 1.16% versus 1.26% QoQ/1.07% YoY.

IDFC First Bank’s (IDFCFB) FY23 annual report titled ‘Robust foundation, responsible progress’ fairly captures the theme of ongoing transformation of the bank and way ahead. Segmental profitability disclosures suggest sharp turnaround in the retail business with calculated RoA around 1.15% for FY23 vs -1.1% in FY22 and -2.6% in FY21.

IDFC First Bank (IDFCFB) has once again reported strong quarterly earnings in Q1FY24 with PAT at INR 7.65bn, (up 61% YoY; in line with our estimates) driven by strong loan growth and moderating cost-income leading to rising core RoA, while net NPAs are down QoQ for the 8th consecutive quarter. The bank has delivered over 1% RoA and >24% YoY loan growth for the 4th consecutive quarter, suggesting strong execution.

We revise our rating from BUY to HOLD on the stock.