IDFC First Bank: Brokerage maintains 'BUY' post Q3 performance; shares targets for Federal Bank, DCB Bank

Axis Securities has maintained its 'BUY' recommendation on IDFC First Bank Ltd after the lender reported a strong performance in the December quarter (Q3 FY26), citing improvement across key operational metrics and a favourable medium-term outlook.

Commenting on the results, the brokerage said, "In Q3, IDFC First Bank reported a good performance with improvement visible across key operational metrics. We expect continued strong performance on growth, with the bank well-placed to deliver a strong 21/23 per cent CAGR credit/deposit growth over FY26-28E. NIMs are likely to remain resilient, supported by strong growth, improving CASA mobilisation, and continued deposit repricing, keeping CoF trending downwards. Operating leverage is beginning to play out, and cost ratios are set to trend downwards as scale benefits accrue. Thus, steady business growth, improving opex ratios, and a gradual easing in credit costs should drive a meaningful improvement in profitability metrics, enabling IDFC First to deliver improved RoA of 1-1.2 per cent over FY27-28E vs 0.5 per cent in FY26E."

Axis Securities also said, "With a shift towards lower-yielding safer assets partially offsetting the benefit accruing from CoF, we expect NIMs to settle at 5.9 per cent (+/-5bps) over FY27-28E vs ~5.7 per cent in FY26."

It has revised its valuation multiple to 1.6x Sep'27E adjusted book value (ABV) from 1.4x FY27E ABV earlier. Accordingly, the brokerage has raised its target price on IDFC First Bank to Rs 101 per share from Rs 83 per share, while reiterating its 'BUY' rating.

Apart from IDFC First Bank, Axis Securities has highlighted other 'BUY' ideas from its banking sector coverage, including Federal Bank with a target price of Rs 320 per share and DCB Bank with a target price of Rs 225 per share.