Buy IDFC First Bank; target of Rs 100: Motilal Oswal

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • IDFC First Bank reported a steady quarter with healthy operating performance and robust business growth, driven by strong FCNR(B) deposit mobilization and broad-based growth in retail and wholesale segments.
  • NIM declined 32bp QoQ to 5.58%, but management expects it to recover to 5.8% by 4QFY27, driven by repo hikes and deployment of surplus liquidity.
  • Loan growth, excluding loans against FCNR(B) deposits, was healthy at 22% YoY, with strong traction across retail and wholesale segments.
  • Management maintains its 1% RoA guidance for FY27 with credit cost guidance at 1.5-1.6%.

Thesis Validation Checklist

  • Investors should watch for NIM recovery, driven by repo hikes and deployment of surplus liquidity, to reach 5.8% by 4QFY27.
  • Loan growth, excluding FCNR(B) deposits, is expected to remain healthy, driven by broad-based growth in retail and wholesale segments.
  • Asset quality is expected to continue improving, with credit cost guidance at 1.5-1.6%.
  • Operating leverage is expected to continue improving, with opex growth remaining below total income growth.