IDFC First Bank Q1 Results Review - Resilient Franchise Amid Yearly Return Shortfalls: Centrum

Centrum Broking Report

IDFC First Bank Ltd. reported Q1 FY25 numbers with lower opex and higher provisions. Net interest income for the quarter came in line at Rs 47 billion (up +25%/+5% YoY/QoQ) in line with our expectations. Other income witnessed an increase of +15%/down 4% YoY/QoQ. However, opex came in at Rs 44.5 billion (up +30%/5.4% YoY/QoQ) below our expectations.

CTI for the quarter came in at 70.5% (down 213 bps sequentially), respectively. Resultantly, pre-provision operating profit came in at Rs 18.5 billion, up +25%/up +10.5% YoY/QoQ growth and +12% above our estimates. However, credit cost for the quarter was much higher at Rs 9.9 billion versus Rs 7.2 billion in Q4 FY24 (2.2% Q1 FY25 versus 1.7% in Q4 FY24 of average advances). Hence, profit after tax came in at Rs 6.4 billion (down 12% YoY /QoQ) versus our expectations of Rs 6.5 billion.

Gross non-performing asset increase sequentially and came in at 1.90% which is higher by 12 bps QoQ, net non-performing asset at 0.60% which also flattish sequentially. CRAR came in at 15.59%.

IDFC First Bank has been consistently missing its guidance on achieving improvement in return profile and we see FY25 as no different hence we cut our target multiple to 1.7 times on FY26 adjusted book value and arrive at a revised target price of Rs 93 (Rs 106). Maintain Buy.

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