IDFC First Bank fraud: Investec cuts share price target, says this 

Shares of IDFC First Bank have received a downgrade from brokerage Investec post the disclosure of Rs 590-crore fraud case by the private sector lender. The brokerage pared its price target by 12.38% to Rs 92 against the earlier target of Rs 105. Yet, the revised price target of the lender is nearly 30% higher to the current market price. 

In the current session, IDFC First Bank shares crashed 15.55% to Rs 70.57. Earlier, the stock tanked 20% to Rs 66.85. Market cap of the bank slipped to Rs 58,259 crore.  

While maintaining a cautious, yet constructive stance, Investec said that the final impact of the fraud hinges on investigation outcomes, recoveries, and further operational improvements.

The brokerage noted that the bank needs to strengthen its operational controls and prevent the issue from spreading to other clients.

Despite the Rs 590-crore short-term impact, the brokerage continues to view the bank’s growth prospects positively, with earlier projections of 29% core Pre-provision operating profit (PPoP) growth (FI25-FI28. 

"Prima facie, unauthorised and fraudulent activities have been carried out by certain employees at a particular branch in Chandigarh in a specific set of Haryana state government accounts and potentially involving other individuals/entities/counterparties," the IDFC First Bank filing said.

"Four suspected officials have been placed under suspension pending investigation. The Bank will pursue strict disciplinary, civil and criminal action against the employees and other external individuals responsible, in accordance with applicable law," added the bank 

Subsequently, the lender said it has appointed KPMG to initiate an independent forensic audit in this matter.