Synopsis: A leading brokerage maintained a ‘Buy’ rating with a Rs 87 target, implying 23% upside from Rs 70.85. A ₹590 crore fraud at one branch led to a 23% FY26 earnings cut, though projections for FY27-28 remain intact. Q3 showed 48% growth in net earnings.
India’s private sector banks drive dynamic growth in the competitive banking landscape. In Q1 FY2026, they boast superior asset quality with gross NPAs at 1.8%, fueling healthy credit expansion of around 9-12% YoY amid system-wide advances nearing ₹191 lakh crore. With 21 such banks powering retail and SME lending, they maintain robust RoAs near 1.7-2% despite margin pressures, positioning for sustained profitability.
With a market capitalisation of Rs 60,925.28 crore, the shares of IDFC First Bank Ltd were trading at Rs 70.85 per share, decreasing around 20 percent as compared to the previous closing price of Rs 70.04 apiece.
Brokerage Recommendations
Axis Direct has maintained a positive outlook on the bank stock, issuing a ‘Buy’ recommendation with a target price of Rs 87. Compared to the current market price of Rs 70.85, this suggests a potential upside of around 23 percent, reflecting the brokerage’s confidence in its growth prospects.
As per the brokerage, IDFC First Bank has reported a ₹590 crore fraud at its Chandigarh branch after the Government of Haryana flagged discrepancies in account balances. The issue appears confined to select government-linked accounts and relates to cheque-based operational lapses, leading to immediate de-empanelment from Haryana government business.
The bank has appointed KPMG to conduct a forensic audit, suspended the concerned branch employees, and initiated recovery steps, including filing a police complaint and seeking lien marking on suspicious accounts. While higher provisions will impact near-term profitability, management has indicated that core operations and deposit growth remain stable.
Moreover, factoring in the entire fraud impact, the brokerage has cut its FY26 earnings estimates by 23% but largely maintained FY27-28 projections. It believes retail deposit momentum remains healthy.
Additionally, the incident of fraud presently appears limited to a single branch, and the management does not expect any meaningful uptick in the amount of fraud going forward. While the core operational performance remains steady, the incident is expected to impact the near-term profitability of the bank. While IDFCB has not received any communication from other state govts.
The company delivered a solid financial performance in Q3FY26, with interest income rising 11% year-on-year to Rs 10,417 crore. More impressively, net profit surged 48% to Rs 503 crore from Rs 339 crore a year ago. The sharp jump in profitability reflects improved margins, better asset quality, and stronger operating efficiency.
IDFC First Bank Ltd is a leading private sector bank in India, formed after the merger of IDFC Bank and Capital First. The bank offers retail banking, corporate banking, and wealth management services. It has built a strong retail-focused franchise with growing deposits, improving profitability, and a nationwide branch network.
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