© Reuters.
IDFC First Bank (NASDAQ:)’s (NSE:IDFC) second quarter of the fiscal year 2024 (Q2 FY24) profit after tax (PAT) has been reported at INR 7.5 billion ($100 million), marking a 35% year-on-year (YoY) increase, according to an analysis by Motilal Oswal. This growth was fueled by robust revenues as net interest income (NII) rose by 32% YoY, driven by significant loan growth and virtually unchanged margins.
The bank’s loan book, which includes credit subsidiaries, expanded by 28% YoY and 7% quarter-on-quarter (QoQ). Deposit growth remained strong at 39% YoY with a stable current account savings account (CASA) mix of 46.4%. Despite the promising potential for additional loan growth, increased operating expenses could restrict return on assets (RoA) expansion.
Since Motilal Oswal initiated coverage in October 2022, the bank’s stock has yielded about a 60% return. However, following a significant outperformance over the past year, the stock now offers limited upside to the revised fair value of INR 95 ($1.27).
The bank is forecasted to deliver a 30% compound annual growth rate (CAGR) in earnings over the fiscal years 2023 to 2026, resulting in RoA/return on equity (RoE) of 1.33%/13.6% in FY26. This projection has led to its rating being downgraded to Neutral amid ongoing moderation in its wholesale book.
InvestingPro Insights
As per InvestingPro’s real-time data, IDFC First Bank exhibits a promising financial profile with a market capitalization of $2.21 billion and a P/E Ratio of 4.32. The bank’s revenue growth in the last 12 months as of Q1 2024 is noteworthy, with a significant increase of 2,748.15%.
Two key InvestingPro Tips that align with the article’s context are:
1. IDFC First Bank’s revenue growth has been accelerating, which is in line with the reported 32% YoY increase in net interest income.
2. The bank has consistently been increasing its earnings per share, indicating strong financial performance and profitability.
InvestingPro offers a multitude of such insightful tips for various companies. For instance, there are 6 additional tips available for IDFC First Bank on InvestingPro.
In conclusion, the bank’s robust financial performance and strong growth metrics make it a noteworthy player in the banking sector. The InvestingPro data and tips provide a more comprehensive understanding of IDFC First Bank’s financial standing and future prospects.
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