IDFC First Bank share price falls over 5% after Q4 net profit dips on higher provisions. Time to buy?

IDFC First Bank’s nett net successful Q4FY24 declined by 10% to ₹724 crore from ₹803 crore successful the year-ago quarter, dragged by a important emergence successful provisions. 

The lender’s provisions accrued 50% from ₹482 crore successful Q4FY23 to ₹722 crore successful Q4FY24.

Net Interest Income (NII) for the 4th grew 24% to ₹4,469 crore from ₹3,597 crore, YoY.

Core Pre-Provisioning Operating Profit (PPOP) for the 4th grew by 22% YoY to ₹1,632 crore successful Q4 FY24. 

Read here: IDFC First Bank Q4 Results: Profit plunges 10% to ₹724 crore, NII rises 24%

On the plus prime front, gross non-performing assets (NPA) improved by 16 bps to 1.88% arsenic of March 31, connected a sequential basis. Net NPA improved by 8 bps QoQ to 0.60%.

IDFC First Bank guides for immoderate maturation moderation but margins are apt to stay mostly unchangeable aided by improving portfolio mix. The slope would support absorption connected gathering a beardown retail deposit publication and steadfast CASA. It expects cost-income ratio, which has been comparatively sticky, to mean arsenic the burn-rate successful the caller concern recedes. 

The lender expects recognition outgo to enactment high, arsenic it shores up provisions further. 

Read here: ICICI Bank: Brokerages stay bullish connected banal station Q4 earnings; rise people price

“IDFC First Bank’s CET 1 ratio has slipped to 13.4% owed to added hazard weights connected Cards/Personal Loan publication and its higher maturation rate, which we judge would telephone for superior rise successful FY25. Factoring-in the comparatively sticky operational outgo and higher LLP, we chopped FY25E and FY26E net 13% and 6%," said Anand Dama, Senior Research Analyst, Emkay Global Financial Services.

He expects IDFC First Bank to present RoA and RoE astatine ~1.2% - 1.3% and 11% -13% successful FY25 - FY26E. 

The brokerage retained its ‘Add’ standing and IDFC First Bank stock terms people of ₹98 per share, valuing the slope astatine 1.8x FY26E ABV.

Motilal Oswal said IDFC First Bank delivered a mixed quarter, with net being mostly successful line, but provisioning and opex were elevated. Net involvement borderline contracted 7 bps QoQ; however, the outlook remains broadly stable. 

Also Read: Maruti Suzuki stock terms gains implicit 2% aft Q4 results; Should you buy, merchantability oregon clasp the stock?

Improvement successful operating leverage chiefly from 2HFY25 onwards coupled with dependable indebtedness growth, constricted deposit repricing, and further replacement of high-cost borrowings successful FY25 volition enactment IDFC First Bank’s underlying profitability, Motilal Oswal added.

It estimates the slope to present ~30% net CAGR implicit FY24-26, with RoA/RoE reaching to 1.3%/13.2% successful FY26. 

The brokerage steadfast reiterated its ‘Neutral’ standing and raised IDFC First Bank stock terms people to ₹88 per share.

At 10:50 am, IDFC First Bank shares were trading 4.57% little astatine ₹80.96 apiece connected the BSE.

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Disclaimer: The views and recommendations made supra are those of idiosyncratic analysts oregon broking companies, and not of Mint. We counsel investors to cheque with certified experts earlier making immoderate concern decisions.

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Published: 29 Apr 2024, 10:51 AM IST