IDFC First Bank slides over 6% after good Q3 results, poor guidance; brokerage cuts target price

IDFC First Bank Share Price: IDFC First Bank slides over 5 per cent on BSE on Tuesday (January 23, 2024) after the lender reported good results but a weak guidance in the December-quarter results. 

The stock of the lender edned the trading session on Tuesday lower by 6.64 per cent, or Rs 5.82, at Rs 81.85. 

IDFC First Bank Q3 results

The results of the company are good, but the guidance for the next five years is soft. After the results, brokerage Morgan Stanley has cut the target.

The company's net interest income soared by 30.5 per cent in the December quarter while its profit after tax was higher by 18.4 per cent in the same duration.

Its provisions saw a rise of 45.4 per cent Year-on-Year (YoY) and 23.9 per cent Quarter-on-Quarter (QoQ).

The deposit growth for the third-quarter was up by 42.8 per cent.

The gross non-performing assets was at 2.04 per cent against Zee research estimates of 2.11 per cent. 

What IDFC First guidance says

In its guidance for the next five years, the lender has estimated its assets to grow at a 5-year CAGR of 19.8 per cent against the current YoY growth rate of 22.3 per cent.

It is expecting its loans and advances to go higher by 20.3 per cent at a 5-year CAGR against the current YoY growth rate of 24.5 per cent.

In terms of customer deposits, the company is estimating them to grow at a 5-year CAGR of 24.8 per cent compared to its current YoY growth rate of 42.8 per cent.

It expect its current account saving account (CASA) deposit to rise at a five-year CAGR of 24.5 per cent against its current YoY growth rate of 28.6 per cent.

The lender estimates term deposit to grow at a 5-year CAGR of 24.5 per cent compared to its current YoY growth rate of 28.6 per cent.

What brokerage says about IDFC First Bank

Morgan Stanley has maintained an equalweight for the lender, but it has cut the target price from Rs 90 to Rs 85.

The brokerage has cut the bank's loan growth estimate by 3 to 4 per cent.

It has also cut the earnings per share (EPS) by 5 per cent to 8 per cent.

It is also expecting a reduction in the bank's return on assets.

The brokerage is concerned about the bank's cash deposit ratio.