IDFC First Bank share price up 10%; here's why | CLSA, Jefferies, HSBC, JPMorgan targets

IDFC First Bank Ltd shares rallied 10 per cent in Monday's trade after several brokerages, including CLSA, ICICI Securities, Nuvama Institutional Equities, and Axis Capital, upgraded their ratings following the bank's better-than-expected June quarter results. Investor sentiment was further buoyed by the management's reaffirmation of its FY27 guidance, with the bank maintaining its target of sustaining a return on assets (RoA) of more than 1 per cent, supported by operating leverage, resilient margins, and stable asset quality.

Analysts said IDFC First Bank's Q1 results were aided by one-off interest on IT refund and strong treasury gains. They noted that the management has raised FY27 net interest margin (NIM) guidance by 5 basis points to around 5.80 per cent. It has also reduced FY27 credit cost guidance to 1.5-1.6 per cent from the earlier 1.7-1.8 per cent. 

Among the 16 brokerages that have released post-Q1 updates so far, Investec has the highest target price of Rs 115, while Morgan Stanley has the lowest target price of Rs 75, Bloomberg data compiled by Business Today showed.

CLSA upgraded IDFC First Bank to 'Accumulate' from 'Hold', raising its target price to Rs 95 from Rs 73. ICICI Securities upgraded the stock to 'Buy' from 'Add', with a revised target price of Rs 100 against Rs 77 earlier. Axis Capital also upgraded its rating to 'Add' from 'Reduce' and increased its target price to Rs 85 from Rs 70.
HSBC finds the stock worth Rs 100, Jefferies at Rs 96 and JPMorgan at Rs 90. Nomura and DAM Capital have a target of Rs 95 each on the stock. 

"IDFC First Bank reported a strong 61 per cent beat on PAT despite the bank utilising one-off CGFMU and recovery to build contingent provision buffers in view of ongoing West-Asia conflict. Deposit growth bounced back to 17.7 per cent YoY/5.9 per cent QoQ after facing Haryana fraud-related issue in Q4 and the management indicates that institutional deposits are holding up well," Nuvama Institutional Equities said.

Factoring in Q1 beat and a steady improvement in opex and credit cost, Nuvama raised its earnings estimates and estimated a 1 per cent return on asset (RoA) for IDFC First Bank in FY27, up from 0.4 per cent in FY26. 

"Hence, we upgrade the stock to ‘BUY’ from ‘HOLD’ with a revised TP of INR95, based on 1.4x Jun-28E ABV (1.2x at CMP)," the brokerage said.

SBI Securities called Q1 as healthy quarter for IDFC First Bank driven by healthy asset growth, improving margins and stable asset quality, resulting in 1 per cent-plus RoA. 

"Deposit growth rebounded sequentially, led by strong CASA accretion, which was impacted due to fraud-related disruptions and rate rationalization," it said while keeping an outstanding open call on the stock with a target price of Rs 93.

On Monday, the stock jumped 9.73 per cent to hit a high of Rs 88.70.