IDFC First Bank made big headlines on July 1 after its shares jumped nearly 6%. The reason? A bullish call from brokerage firm Investec. This move pushed the stock to an intraday high of ₹77.39, the highest in almost 11 months.
The momentum didn’t stop there. The shares closed the day strong at ₹77.10, continuing a three-day winning streak. In just the past five days, the stock has climbed over 7%. It’s up more than 12% in a month and 20% in 2025 so far.
What Did Investec Say About IDFC First Bank?
Investec upgraded IDFC First Bank to a ‘Buy’ rating. That’s not all — they also raised the stock’s target price by 38.5%, from ₹65 to ₹90. This gives the stock an upside potential of nearly 17% from current levels.
According to Investec’s note (cited by CNBC-TV18), the bank is expected to post strong growth in the next few years. Here are the key reasons:
- Core Pre-Provision Operating Profit (PPoP) is expected to grow at a CAGR of 29% from FY25 to FY28.
- This will be helped by an 80 basis points cut in cost-to-assets.
- Credit costs are likely to fall by 90 basis points, boosting profits.
- As a result, the bank’s Return on Assets (RoA) could improve to 1.3% by FY28 — more than double from last year’s 0.5%.
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But What About the Recent Profit Drop?
While this outlook sounds positive, IDFC First Bank did face a hit recently. In Q4 FY25, the bank posted a net profit of ₹304 crore, down 58% from ₹724 crore a year ago. The fall was mainly due to higher provisions for its microfinance portfolio.
Despite this, the bank’s core business looks strong:
- Customer deposits rose 25.2% YoY to ₹2.42 lakh crore.
- Retail deposits grew by 26.4% to ₹1.91 lakh crore.
- Net Interest Income (NII) rose by 9.8% YoY for Q4 and 17.3% for the full year.
- Net Interest Margin (NIM) for Q4 was 5.95%, a slight dip due to stress in the microfinance sector.
Why It Matters
This upgrade comes at a time when investors are looking for strong retail-focused banks. With big names backing IDFC and a solid deposit base, the future looks promising.
As Investec sees it, IDFC First Bank could soon become a star in India’s private banking space.
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