Bullish indicating open at $55-$60, IPO prices at $37
Investing.com - UBS initiated coverage on IDFC First Bank (NASDAQ:FRBA) Ltd (IDFCFB:IN) with a Neutral rating and a price target of INR85.00 on Friday.
The bank, which transformed from an infrastructure-focused lender to a retail franchise following its merger with Capital First in December 2018, has built a retail/CASA deposit mix of approximately 76%/47% as of fiscal year 2025, according to UBS.
Despite the improved liability franchise and a supportive growth environment due to easing liquidity, UBS expects the bank’s credit costs to remain elevated at approximately 1.9-2.1% in FY26-28, primarily due to its high share of unsecured loans.
UBS forecasts IDFC First Bank’s cost-to-income ratio will moderate but remain elevated, keeping return on assets (ROA) at a modest 1% by FY27, compared to 1.1% in FY22-24, and limiting return on equity expansion.
At 1.3x September 2026 estimated price-to-book value, UBS views the bank’s risk-reward profile as neutral with limited upside potential.
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