The share price of IDFC First Bank opened lower on the NSE today at 61.01 apiece, and it fell as low as 59.30 apiece after the company’s Q2 results for 2024 were announced last Saturday. The price of IDFC First Bank’s shares fell more than 5% during Monday morning trading before reaching this intraday low.
Shares of IDFC First Bank are plunging, according to stock market analysts, following the release of the bank’s dismal Q2 2024 results on Saturday. As a result of an increase in provisions, they stated, the bank’s net profit decreased during the July to September 2024 quarter. According to international broking Jefferies, the decline in IDFC First Bank shares presents a bottom fishing opportunity, with a long-term target price of 鈧�85.
IDFC First Bank 2024 Q2 results
Anshul Jain, Head of Research at Lakshmishree Investment and Securities, said, 鈥淚DFC First Bank鈥檚 September quarter results revealed a challenging phase, with a sharp 73% drop in standalone net profit to 鈧�201 crore from 鈧�751 crore a year earlier. Despite a 21% rise in Net Interest Income (NII) to 鈧�4,788 crore, up from 鈧�3,950 crore, the bottom line was heavily impacted by significant provisions, totalling 鈧�568 crores. This included 鈧�315 crore in provisions for the Microfinance Institution (MFI) segment, which faced industry-wide stress, and 鈧�253 crore for a toll account in Maharashtra, highlighting potential ongoing credit risk.鈥�
鈥淲hile the bank鈥檚 loans and advances grew by 21.5% year-on-year to聽鈧�2,22,613 crore, driven by a strong retail lending performance, its legacy infrastructure exposure declined by 21%, indicating a continued effort to derisk. However, the bank’s Gross NPA ratio, though improved from 2.11% to 1.92% year-on-year, still signals caution, especially amid macroeconomic uncertainties that could weigh on loan quality,鈥� Anshul added.
IDFC First Bank’s decrease in the MFI portfolio as a percentage of the overall loan book (from 6.3% in June 2024 to 5.6% in September 2024) is indicative of a cautious approach, according to Anshul Jain of Lakshmishree Investment and Securities. However, the pressure from the industry in this sector can still affect short-term profitability. As IDFC First manages continuing risks, the bank’s earnings forecast may continue to be bad due to the high provisioning and possible credit issues, indicating a gloomy sentiment shortly.
Share price target
Global brokerage Jefferies said, expecting a rebound in IDFC First Bank shares, 鈥淚DFC First’s profit for 2QFY25 fell by 73% YoY to Rs2bn due to surge in credit cost for MFI book. Deposits +31% YoY, Loans +21%, LDR -c780bps, NII up 21% & op. Profit +27%. Also, the quality of other retail loans has held up well as SMA-1&2 is down/stable QoQ. We cut earnings for FY25 by 35% and FY26-27 by 9-18% to factor higher credit cost and a tad slower loan growth.鈥�
Jefferies, however, lowered the long-term share price forecast for IDFC First Bank from 95 to 85.
