Jefferies maintains ‘buy’ call on IDFC First Bank, sees 22% upside

Some the key levers for re-rating would include margin expansion, bump up in deposit franchise, improvement in cost trends

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Shares of IDFC First Bank will be in focus after Jefferies maintained a ‘buy’ call on the counter as analysts see multiple levers from its credit cards business and assigned a target price of Rs 100 per share, implying an upside of 22 percent from the current levels.

So far this year, the stock of this private sector lender has declined over 6 percent, underperforming a 2.4 percent rise in the benchmark Nifty. Earlier, IDFC First Bank shares had hit 52-week high of Rs 100 per share on September 5, 2023.

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According to Jefferies, analysts believe that the rise in return on asset (RoA) to 1.5 percent will be key to IDFC First Bank’s re-rating and see it panning from H2FY25 onwards.

“We note the good recognition of deposit franchise, tech platform, and distribution. We see multiple levers from turnaround of credit cards business and expect benefits of ramp-up of new branches to trickle in,” said the foreign brokerage.

Some of the key levers for re-rating would include margin expansion, bump-up in deposit franchise, improvement in cost trends, and credit quality, the brokerage highlighted.

Also read: Now, IDFC First Bank cuts credit card benefits; what it means for cardholders

IDFC First Bank boasts of a comprehensive banking platform catering to diverse customers with competitive rates and robust technology.

The bank’s urban presence facilitated over Rs 50,000 crore in retail deposits between March 21 and December 23, recording a 30 percent CAGR and positioning it as one of the fastest-growing banks.

The private sector lender has expanded its lending operations into retail, rural, and SME sectors while diversifying its corporate portfolio beyond infrastructure loans.

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