IDFC First Bank shares fall nearly 6% after Q4 results. Should you invest?

The board has also approved the borrowing of funds by the issuance of debt Instruments up to Rs 5,000 crore.

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Here’s what brokerage firms say about the stock:

Motilal Oswal

IDFCFB delivered a mixed quarter, with earnings largely in line, but provisioning and opex were elevated. NIM contracted 7bp QoQ; however, the outlook remains broadly stable. On the business front, deposit traction continues to remain robust, while CASA mix improved sequentially and advances’ growth too remained healthy. However, improvement in operating leverage mainly from 2HFY25 onwards coupled with steady loan growth, limited deposit repricing, and further replacement of high-cost borrowings in FY25 will support IDFCFB’s underlying profitability.

The brokerage firm has reiterated a ‘buy’ opinion on the stock with a revised target price of Rs 88.

JP Morgan

After the Q4 results, JP Morgan has given a ‘neutral’ view on the stock and has stated a target price of Rs 75, which implies a potential downside of 7%.

Morgan Stanley

Morgan Stanley has given an ‘equalweight’ rating for IDFCFB while stating a target of Rs 78, which is 3.6% on the downside.

Emkay Global

IDFCB continues to report strong growth (28% YoY) with healthy & stable margins at 6.4%, but opex remains rigidly high with C/I ratio at 73%. Bank guides for some growth moderation but margins to remain largely stable aided by improving portfolio mix. Bank would maintain focus on building a strong retail deposit book and healthy CASA. It expects cost-income ratio, which has been relatively sticky, to moderate as the burn-rate in the new business recedes (e.g. Credit Cards). Bank expects credit cost to stay high, as it shores up provisions further. We cut FY25/26 earnings to 13%/6% and expect the bank to deliver RoA/RoE at 1.2-1.3%/11-13% in FY25-26.

On this backing, the brokerage rates IDFC as a ‘buy’ with a target price of Rs 98.

Nuvama

IDFC First Bank delivered in-line Q4FY24 PAT, beating expectations on fees, but a miss on provisions. Loans grew 6% QoQ with a slowdown in consumer and rural while deposit growth held strong (CASA up 60bp YoY). CI stood elevated at 72.9%. LCR fell from 120% to 114% as IDFCFB went slow on IBPC borrowings due to pricing. The CEO remains upbeat on growth, fees and improving branch productivity. CI shall improve in H2FY25 as the credit card business is likely to break even in H2 and become profitable in FY26E. NIM could also inch up with full repricing of legacy bonds. Credit cost guidance of 1.65% in FY25 is higher than 1.2% in FY24 (1.5% in Q4FY24) due to seasoning.

Nuvama has rated IDFC with a ‘hold’ with a target price of Rs 85.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)