Shares of IDFC First Bank are under immense pressure in trade on Monday after the lender disclosed Rs 590 crore worth of fraud linked to the Haryana government accounts at a Chandigarh branch. The stock is trading at Rs 70.41, accounting for a sharp 15% fall compared to the previous closing price of Rs 83.51.
This is despite the fact that brokerages, including Ashika has played down the impact of the fraud, citing it might only be an operational loss rather than damaging the lender's fundamentals.
Out of 29 analysts tracking the company, 18 maintain a 'buy' rating, six recommend a 'hold,' and five suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 8.4%.
Buy, Sell or Hold?
NDTV Profit spoke to Kush Bohra, founder of Kushbohra.com, who has a clear 'avoid' rating on the stock in the wake of the recent developments.
Meanwhile, Adity Arora, founder and multi-asset research analyst at AdlytickX, is 'cautious, defensive and underweight' on the lender.
"Investors will remain cautious on the stock, given IDFC First Bank is already fighting a valuation battle in a market that rewards pristine balance sheets and punishes even minor governance lapses. Now this," he said.
"Banking is a confidence business. You can survive weak quarters, but you cannot repeatedly survive trust erosion. Until clarity emerges, this isn't a growth story; it's a risk-management story. And risk stories trade at discounts," he added.
G Chokkalingam, Founder & MD, Equinomics Research, believes the valuations could be at moderate levels if the fraud amount is adjusted.
"After fully adjusting for fraud amount, its price to adjusted book value comes to 1.5x on FY2026 estimated earnings. We believe this valuation multiple is quite decent at the current price of around Rs 68. In case it falls further close to Rs. 64 it could be attractive for medium to long term," he said.
ALSO READ: IDFC First Bank Alleged Fraud: Brokerage Downplays Impact As 'Operational Risk'
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