The brokerage highlighted that IDFC First Bank has made significant progress in strengthening its deposit franchise while sustaining robust loan growth and steadily de-risking the balance sheet. The bank is well positioned for a sustainable recovery in profitability, supported by healthy business growth, improvement in operating leverage and controlled credit cost.
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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has upgraded IDFC First Bank Ltd. to Buy from Neutral and has set a target price of Rs 105, based on 1.6x FY28E adjusted book value, implying a potential upside of 23% from the reports current market price of Rs 85.
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The brokerage highlighted that IDFC First Bank has made significant progress in strengthening its deposit franchise while sustaining robust loan growth and steadily de-risking the balance sheet.
The bank is well positioned for a sustainable recovery in profitability, supported by healthy business growth, improvement in operating leverage and controlled credit cost.
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Additionally, IDFC First Bank has strengthened internal controls and governance processes and has lowered its credit cost guidance, underscoring strong asset quality trends.
The brokerage estimates gross non-performing asset and net non performing asset to moderate to 1.4%/0.4% by FY28E.
Motilal Oswal estimates IDFC First Bank to deliver 42% pre-provision operating profit compound annual growth rate over FY26-28E and cost/income ratio to improve to ~69%/65% in FY27/28, translating into RoA/RoE of 1.2%/11.9% by FY28E.
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