Shares of IDFC First Bank tumbled over 9% on October 28 after the private sector lender reported a significant 73% drop in net profit for the second quarter, falling to Rs 200.7 crore from Rs 751 crore in the same period last year. Despite a 21% increase in Net Interest Income (NII) to Rs 4,788 crore, the profit decline weighed heavily on investor sentiment, with shares quoted at Rs 59.79 on the NSE in early trading.
The steep fall in net profit was attributed to higher provisions, which stood at Rs 1,732 crore in Q2, including a prudent provisioning buffer of Rs 568 crore. On a positive note, the bank’s asset quality showed improvement, with gross NPAs decreasing to 1.92% and net NPAs falling to 0.48%. However, the moderation in the bank’s net interest margin (NIM) and the need to mobilize deposits kept the outlook cautious.
Brokerages have maintained their mixed view. Nuvama Institutional Equities trimmed the target price to Rs 60 and maintained its ‘add’ rating, while Motilal Oswal reiterated a ‘neutral’ call with a price target of Rs 73 per share. Both brokerages pointed towards healthy advances growth, but flagged high costs and continued deposit mobilization requirements.
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Source: Moneycontrol
News Desk
