Centrum initiates coverage on IDFC First Bank with a ‘BUY’ rating; Sees 16% upside
时间:2024-06-26 18:34:56 阅读(143)
Centrum, a prominent financial institution, has recently initiated coverage on IDFC First Bank, offering a positive outlook with a ‘BUY’ rating and a target price of Rs 104, indicating a potential upside of 16%.
Centrum anticipates that IDFC First Bank will exhibit a robust growth trajectory, with an expected 29%, 33%, and 34% increase in Net Interest Income (NII), Pre-Provision Operating Profit (PPoP), and Profit After Tax (PAT) Compound Annual Growth Rate (CAGR) over FY23-26E.
Centrum notes that IDFC First Bank has consistently gained market share, currently standing at 1%, particularly since its merger with Capital First. This growth is evident in both advances, especially in the retail segment, and deposits.
Analysts at Centrum believe that the bank has a substantial runway for future growth, driven by an expanded product portfolio and a robust “phygital” (physical + digital) distribution network.
The report also highlights the management’s confidence in maintaining a consistent and robust growth trajectory in advance, foreseeing an impressive 25% increase over the next few years.
The anticipation of upcoming interest rate cuts in the following year positions IDFC Bank for potential relief in the Cost of Funds (CoF), which has experienced a notable increase of +160 basis points since 1QFY23.
Centrum’s analysis suggests that the recent maturity of branch additions, with approximately one-third added in the last couple of years and more than 70% having a vintage of less than a year, should provide operational cost relief. The report incorporates a 230 basis points Cost to Income (CTI) improvement over FY23-26E, aligning with the management’s guidance of over 500 basis points.
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