IDFC First Bank
Turnaround: liability franchise ahead of profits
- Last close
- ₹79.46
- 29 Sept 2026 · reference
- 1D · 1M
- −1.4% · −4.4%
- price-only
- Weight
- 2.3%
- 31 Jul 2026 · Aug rank 20
- Thesis review
- 8 Sep 2026
- Why We Own, p30
Approved description
Private-sector universal bank formed from the 2018 merger of IDFC Bank and Capital First, now a retail/MSME-focused lender with loans of Rs 3.05 lakh crore (+20.6% YoY) and customer deposits of ~Rs 3 lakh crore (Jun-2026). It has one of the highest CASA ratios among private banks (50.8%) and a 5.9-6.0% NIM, but a 70%+ cost-to-income ratio and the FY25-26 microfinance stress kept FY26 ROA at ~0.4%. No identifiable promoter (promoter holding 0%); Warburg Pincus (~9.5%) and ADIA (~5.1%) became anchor investors via a Rs 7,500 cr CCPS issue in 2025.
- 01Earnings inflection: Q1FY27 PAT Rs 1,075 cr (+132% YoY, 61% above street) vs FY26 full-year PAT of ~Rs 1,600 cr; management guides FY27 ROA ~1% (FY26: 0.4%) and a medium-term 1.7-1.8% ROA.
- 02Credit cost past peak: MFI book shrank to Rs 6,700 cr with SMA normalised at 0.71% and 93% CGTMSE cover; FY27 credit-cost guidance lowered to 150-160 bps (from 170-180); gross slippages -30% YoY.
- 03Liability franchise is the moat: CASA ratio 50.8% (+283 bps YoY), customer deposits +16.6% to Rs 3 lakh cr, cost of funds stabilised ~6%, NIM 5.96% with FY27 guidance raised to 5.8%.
- 04Operating leverage: cost-to-income improved 310 bps YoY to 70.7% with ~500 bps positive jaws; management targets <70% in FY27, with each 100 bps roughly 10% of PAT at current scale (our arithmetic on Rs 1,075 cr quarterly PAT is not sourced - treat as illustrative).
- 05Capital in place: CET1 13.33% / CAR 15.05% after the Rs 7,500 cr Warburg/ADIA CCPS converted in Oct-2025, plus a fresh Rs 20,000 cr enabling resolution (27-Jul-2026); 1.5x book for a bank moving from 0.4% to 1% ROA.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Total Income | 13,361 | +12.6% | +9.7% |
| Interest Earned | 11,051 | +14.6% | +4.7% |
| PPOP | 2,626 | +17.8% | +145.4% |
| Net Profit | 1,148 | +153.4% | +246.8% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
Bank preset: NII, PPOP, provisions, NIM, GNPA, CASA, ROA/ROE; P/B. Industrial leverage ratios suppressed.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Valuation range
No headline target on this page; the book quotes the thesis and the risk rather than a target.
What we watch
- Q2FY27 results (Oct-2026): sustaining >Rs 1,000 cr quarterly PAT and cost-income below 70% would confirm the FY27 1% ROA guidance.
- Announcement of the RBI-approved timing/structure of the Rs 20,000 cr capital raise approved on 27-Jul-2026 and any inclusion in large-cap indices as market cap crosses ~Rs 75,000 cr.
- Microfinance normalisation: bank targets 15% MFI book growth by FY27-end with 93% CGTMSE cover; further credit-cost guidance cut below 150 bps.
- Cost-to-income at 70.7% is the highest among large private banks; if opex growth re-accelerates (branch/tech build, Chandigarh-branch deposit fraud one-offs in Q4FY26), the ROA path to 1% slips.
- Q1 beat leaned on a one-off Rs 515 cr CGFMU recovery (used to create a contingency provision amid West-Asia conflict concerns); underlying ROA was ~0.9% adjusted, so a rural/MFI relapse or unsecured retail stress would push credit cost back above 1.6%.
- Dilution/overhang: 81.26 cr new shares from CCPS conversion (Oct-2025) plus a fresh Rs 20,000 cr enabling resolution; ROE only 9% in Q1FY27 and FY26 ROE 3.8%, so book compounding is slow until ROA reaches 1.5%+.