2 hrs ago
IDFC First Bank Gains as Motilal Oswal Sees Upside
IDFC First Bank’s shares went up by almost 3%.
This happened after Motilal Oswal recommended buying the stock.
The brokerage believes the bank has improved its deposits, loans, controls, and governance.
The bank has also reduced its microfinance loans from Rs 13,340 crore to Rs 6,700 crore.
This may reduce the stress caused by problems in the microfinance sector.
Motilal Oswal expects the bank’s profitability to improve as these problems fade.
The brokerage also expects net bad loans to fall to 0.4% by FY28.
New foreign-currency deposits could increase earnings, but they may slightly reduce margins.
Motilal Oswal set a share-price target of Rs 105.
IDFC First Bank shares rose nearly 3% after Motilal Oswal upgraded the stock to Buy.
Motilal Oswal set a target price of Rs 105, implying nearly 20% upside from the September 23 closing price.
The bank’s microfinance book has fallen to Rs 6,700 crore from Rs 13,340 crore in FY24.
Motilal Oswal expects net NPAs to moderate to 0.4% by FY28 as asset quality improves.
FCNR (B) mobilisation could boost full-year NII and EPS by 4%-7%, although it may temporarily dilute NIMs.
- Who
- IDFC First Bank and Motilal Oswal.
- What
- IDFC First Bank shares rose nearly 3% after Motilal Oswal upgraded the stock to Buy and set a Rs 105 target price.
- Where
- The report concerns IDFC First Bank’s operations and shares; the trading venue is not specified.
- When
- The shares moved during trading on the day of the report; the target compares with the September 23 closing price. The estimates refer to FY27 and FY28.
- Why
- Motilal Oswal cited stronger deposits, robust loan growth, a smaller microfinance book, improving controls, lower expected credit costs, and potential FCNR (B)-related earnings growth.
Key facts
- Share movement
- IDFC First Bank shares rose nearly 3% in trading.
- Brokerage recommendation
- Motilal Oswal upgraded the stock to Buy.
- Price target
- Rs 105 per share, implying nearly 20% upside from the September 23 closing price.
- Microfinance book
- Reduced to Rs 6,700 crore from Rs 13,340 crore in FY24.
- Expected net NPA
- Motilal Oswal estimates net NPAs could moderate to 0.4% by FY28.
- FCNR (B) impact
- The mobilisation could boost full-year NII and EPS by 4%-7%, depending on deployment.
- FY27 NIM guidance
- Raised by 5 basis points to 5.8%.
Quotes
Motilal Oswal
Brokerage firm providing the research assessment of IDFC First Bank
“going forward, stable NIMs, 21% loan growth, strong fee income traction and emerging operating leverage should drive a meaningful recovery in profitability. We believe IDFC First Bank is transitioning from a balance-sheet repair phase to a period of consistent earnings compounding.”
financialexpress.com
“despite the near-term NIM drag, FCNR (B) mobilization could boost NII and EPS by 4- 7% for full year FY2E. The magnitude of the benefit depends on the deployment mix.”
financialexpress.com
Sources
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