Shares of IDFC First Bank rose after the highest ever gains in the first quarter. should you buy

IDFC First BankNet Interest Income (NII), which is the difference between interest earned and interest spent, increased by 26% 2,751 crore in Q1FY23 while Net Interest Margin (NIM) increased to 5.89% from 5.50%.

The bank’s asset quality showed improvement as gross non-performing assets (NPAs) fell to 3.36% of gross advances in the June 2022 quarter, from 4.61% a year ago. Net NPAs also declined from 2.32% to 1.30%.

“IDFC First Bank (IDFCFB) Q1FY23 earnings were well ahead of I-Sec and consensus expectations, with PAT 38% QoQ growth. “The core operating profit trajectory at Rs 10 billion (18% QoQ / 64% YoY) gives confidence to the targeted ROA/ROE,” ICICI Securities said in a note.

IDFC First Bank is confident of its guidance of <2% retail GNPA and <1.5% credit cost in FY13. The current RoE profile is fueled by higher cost structure, retail liabilities and loss burden in the credit card business, highlighting the brokerage which has maintained its buy tag on the bank stock with an unchanged target price 59 per share and sees the higher cost structure as a major risk.

“We have made the highest ever profit after tax 474 crore in Q1FY23. V Vaidyanathan, MD and CEO, IDFC First Bank said, “Our return on assets has reached around 1 per cent and we expect it to grow from here.”

Shares of IDFC First Bank are down more than 21% so far in 2022 (Year-to-date or YTD), whereas, the counter has fallen by almost 25% in a one-year period.

The views and recommendations given above are those of individual analysts or broking companies and not of Mint.

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