The brokerage said it sees IDFC First Bank’s Core Pre-Provisioning Operating Profit (PPoP) to grow at a Compounded Annual Growth Rate (CAGR) of 29% over financial year 2025-2028, which will be aided by a 80 basis points reduction in the lender’s cost-to-assets.
This, combined with a 90 basis points decline in credit cost from elevated levels over financial year 2025-2028, should help drive 1.3% return on assets (RoA) by financial year 2028, compared to 0.5% last year, Investec said.It said the lender is seeing operating leverage play out across businesses. However, it is not evident currently at the headline level due to strong pace of ‘realisation’ on both assets and liabilities, which Investec believes is near completion.
The brokerage said it finds IDFC First Bank’s core earnings-per-share growth trajectory compelling.IDFC First Bank’s March quarter net profit declined 58% to ₹304.1 crore from ₹724.3 crore in the previous fiscal. It was also below Street estimates of ₹359.6 crore.
Its net interest margin stood at ₹4,907.1 crore, up 9.8% from the previous fiscal’s ₹4,468.9 crore. However, it was lower than Street expectations of ₹5,080.2 crore.
Of the 25 analysts that have coverage on the stock, 15 have a “buy” rating, and five each have “hold” and “sell” ratings.
Shares of IDFC First Bank gained 4.75% to hit an intraday high of ₹76.3 apiece. The stock has gained 10.7% in the past month and 18.5% this year, so far.
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