IDFC First Bank Share Price Plunges As Profit Takes Major Hit; CEO Cites Hike In Provisions

IDFC First Bank Ltd.'s share price fell as the lender reported a significant decline in profit for the quarter ended September. The net profit declined over 73% to Rs 201 crore. This downturn is primarily due to a sharp increase in provisions, which rose to Rs 1,732 crore from Rs 528 crore a year ago, according to V Vaidyanathan, Managing Director and CEO. 

Shares of the company almost hit the lower circuit in early trade on Monday after it announced September quarter results over the weekend.

Vaidyanathan spoke on the exit of a long standing client with an exposure of Rs 1,100 crore and how they did not want to be a hostage to the profitability of future quarters.

He noted that the bank recognised the need to act decisively in light of emerging challenges, stating, “We don’t buy quick solutions around these challenges. We always take our issues directly and recognise stress early.” 

The CEO pointed to various factors contributing to the stress in the micro finance sector, including recent heat waves and election-related disruptions, leading to a sharp increase in pre-stage delinquencies.

Vaidyanathan also addressed the bank's credit card portfolio, noting that it has not experienced the same level of delinquency, with just 1.4% of accounts 90 days past due. “Our strategy focuses on lending primarily to customers with higher savings balances, which helps maintain a robust credit profile,” he said.

Despite the profit decline, the bank's net interest income grew by 21% to Rs 4,788 crore, driven by a 22% increase in its loan book. Vaidyanathan concluded, “While we face challenges, we are also witnessing healthy growth across our retail and corporate loan segments, showcasing a balanced approach to navigating the current environment.”

• Reiterate 'neutral' with a target price of Rs 73, implying an 11% upside from the previous close.  

• Raised credit cost guidance to 2.2-2.25%.  

• Deposit growth remains robust; margins moderated by 4 bps sequentially.  

• Higher credit cost largely due to a Rs 568 crore provisioning buffer.  

• Earnings dragged down by elevated provisioning.  

• Valued at 1.4 times estimated financial year 2026 adjusted book value.

• Maintain 'buy' with a target price of Rs 85 per share, implying a 30% upside from the previous close.  

• Higher stress in micro finance and one-time provisioning masked stable retail asset quality.

• Strong deposit growth, though earnings revised down by 9-18%, impacting target price.

IDFC First Bank stock fell as much as 9.56% during the day to Rs 59.24 apiece on the NSE. It was trading 3.04% lower at Rs 63.51 apiece, compared to a 0.79% advance in the benchmark Nifty 50 as of 10:22 a.m. 

It has fallen 23.81% in the last 12 months and 28.76% on a year-to-date basis. The total traded volume so far in the day stood at 15 times its 30-day average. The relative strength index was at 23.49.

Ten out of the 21 analysts tracking IDFC First Bank have a 'buy' rating on the stock, seven recommend a 'hold' and four suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 17.6%.