IDFC First Bank: Bears lose control; MOSL says this on Q4 earnings impact 

Shares of IDFC First Bank were trading on a flat note today after crashing 17% in the previous session. The banking stock came under intense selling pressure after the bank disclosed a Rs 590-crore fraud committed by its employees and others in accounts held by the Haryana government with the private sector lender.

IDFC First Bank shares were unchanged at Rs 69.55 in early deals today against the previous close of Rs 70.04. Market cap of the bank stood at Rs 59,695 crore.

Motilal Oswal in a report said the fraud was not a systemic failure and was confined to a single Chandigarh branch. It does not extend to other customers or branches, with prima facie evidence pointing to employee collusion with external parties.

The brokerage maintained a neutral call on the stock with a price target of Rs 80, an upside of 14% to the previous close.

Estimating losses to the financials from the Rs 590 crore fraud, the brokerage said, "Basis findings and following the due procedures, the bank will look to make necessary provisions in the coming quarter. We believe that in a worst-case scenario assuming negligible recovery, the provisioning requirement will impact 4QFY26 profit before tax (PBT) by 56%."

"We look forward to get more clarity on these developments and a potential recovery that may possibly happen as the authorities investigate the matter," added MOSL.

Brokerage Investec post the disclosure of Rs 590-crore fraud case by the private sector lender 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 was nearly 30% higher to the current market price.

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.