Gold prices steady ahead of Fed decision; weekly weakness noted
On Tuesday, JPMorgan analyst Saurabh Kumar upgraded IDFC First Bank (NASDAQ:FRBA) Ltd (IDFCFB:IN) to ’Neutral’ from ’Underweight’, with a new price target set at INR63.00, up from the previous INR50.00. This revision follows the bank’s fourth-quarter financial results for the fiscal year 2025.
Despite the bank’s fourth-quarter performance falling short of JPMorgan’s estimates, due to weaker than expected Pre-Provision Operating Profit (PPOP) and higher credit costs, Kumar noted several positive factors supporting the upgrade. The bank’s significant retail asset share and a strong Current Account Savings Account (CASA) ratio of 46.9% in FY25 were highlighted as elements contributing to superior spreads.
IDFC First Bank’s ability to mobilize deposits was also emphasized, with retail deposits witnessing a 27% year-over-year increase in FY25. While microfinance segments are anticipated to continue facing stress in the near term, the bank’s performance in other segments has been solid throughout the fiscal year. The analyst expects that as microfinance slippages decrease, credit costs will likely improve.
The recent capital raise by the bank was noted as a positive development, eliminating a previous concern and potentially aiding a 20% loan growth over the next three years. Kumar’s commentary reflects a belief in the bank’s structural strengths, including high Net Interest Margins (NIMs), a large retail deposit base, stable asset quality excluding the microfinance segment, and the potential for growth, all of which have contributed to the upgraded rating.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.