IDFCFIRSTB - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.4

🧾 Core Financial Analysis

📉 Profitability & Growth

PAT Qtr: ₹453 Cr vs ₹296 Cr — strong sequential growth, but YoY profit variation of -29.4% raises concerns.

EPS: ₹1.77 — very low for a ₹70 stock.

ROE (4.21%) & ROCE (6.22%) — weak return metrics, indicating inefficient capital deployment.

💰 Cash Flow & Debt

Debt-to-Equity: 7.97 — very high, though typical for banks, it reflects aggressive expansion.

Dividend Yield: 0.36% — minimal income generation.

Cash Flow: Likely under pressure due to reinvestment and low profitability.

📊 Valuation Metrics

Metric Value Insight

P/E Ratio 39.6 Overvalued vs industry PE of 12.6

P/B Ratio ~1.34 Reasonable, but not compelling given low ROE

PEG Ratio 0.33 Suggests undervaluation relative to growth — positive

Intrinsic Value Estimated ~₹55–₹60 Based on earnings and sector benchmarks

🏦 Business Model & Competitive Advantage

Sector: Banking — IDFC First Bank is a new-age private bank focused on retail lending.

Model: Transitioning from infrastructure-heavy legacy to retail-centric, with emphasis on digital banking.

Moat: Strong CASA ratio, customer-centric approach, and tech-driven operations.

Growth Drivers: Retail loan book expansion, digital adoption, and improving asset quality.

Risks: Low profitability, high cost-to-income ratio, and dilution risk from capital raising.

📉 Technical & Sentiment Indicators

RSI: 37.4 — approaching oversold zone.

MACD: -0.37 — weak momentum.

DMA 50 & 200: Price near DMA200 — neutral to mildly bearish.

Volume: Below average — waning investor interest.

💡 Investment Guidance

📌 Entry Zone (If Undervalued)

₹60–₹65 — better risk-reward zone near intrinsic value and technical support.

Strong support around ₹55–₹58.

📈 Long-Term Holding View

High-risk, high-reward candidate.

Business transformation is promising, but fundamentals are still catching up.

Suitable for investors with high risk tolerance and a 3–5 year horizon.

Monitor profitability trends and cost control for signs of sustainable turnaround.

Would you like a comparison with RBL Bank or AU Small Finance Bank to explore similar retail-focused banking plays?

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