ICICI Direct is bullish on IDFC First Bank has recommended buy rating on the stock with a target price of Rs 23 in its research report dated May 26, 2020.
ICICI Direct's research report on IDFC First Bank
Amid Covid, the bank offered moratorium to customers as per regulatory requirement. Customers with ~35% of advances opted for the same. Provision was at Rs 679 crore, including Rs 225 crore related to Covid-19. Out of remaining normalised provision of Rs 454 crore, Rs 349 crore is for retail loans and Rs 105 crore pertains to wholesale loans. Asset quality saw QoQ improvement with GNPA, NNPA ratio improving ~23 bps, ~29 bps to 2.60% 0.94%, respectively.
Outlook
However, in current scenario, substantial exposure to SME segment makes it prone to near asset quality concerns. Capital raised provides improved ability to absorb any near term shocks but delays return ratio target. Revising earnings estimate by factoring the current scenario, we value the bank at ~0.75x FY22E ABV with a revised TP of Rs 23. Maintain BUY.
For all recommendations report, click here
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