Arihant Capital has given Accumulate recommendation for IDFC First Bank with a target price of Rs. 59 in its research report issued on May 02, 2022

Arihant Capital’s research report on IDFC First Bank

IDFC First Bank has reported good performance during Q4FY22 with strong profit growth of 168% YoY/22% QoQ to INR 343 cr was higher than our estimate of INR 300 cr driven by strong operating profit growth and lower provisioning. The early bucket collection efficiency has surpassed pre-covid level at 99.6% in urban and 99.7% in rural retail segment. At bank level, asset quality improved with GNPA/NNPA decreased by 26bps/21bps QoQ at 3.7%/1.5% respectively. Retail GNPA reduced from 2.9% to 2.6% QoQ and NNPA reduced from 1.3% to 1.1% QoQ. Management has guided to reduce its retail GNPA/NNPA at 2% and 1% respectively. NIM improved from 5.9% to 6.3% QoQ, due to improved share of retail loans and reduction in cost of funds. The Bank has not utilised the covid provision during the quarter and carries provisions of INR 165 crore as of Q4FY22. Business momentum of the bank was healthy with funded assets growth of 13% YoY/8% QoQ.

Outlook

We revise our rating on the stock to Buy from Accumulate with a revised target price of INR 59, based on 1.6x P/ABV to its FY24E.

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