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IDFC First Bank shares rise following Q1 earnings record. Buy?

IDFC First Bank shares: On Monday morning’s opening trades, the price of shares increased by more than 3 percent on the BSE.

IDFC First Bank shares

After the bank announced its highest-ever net profit of 474 crore for the quarter ended June 2022, primarily driven by lower provisioning and higher income, up 38 percent from the previous quarter of March 2022, shares of IDFC First Bank surged more than 8 percent to 40 per share on the BSE in Monday’s opening deals. In the same quarter last year, the private sector lender reported a net loss of 630 crore.

The difference between interest earned and interest paid, or net interest income (NII), for IDFC First Bank increased by 26% to 2,751 crore in Q1FY23, while the bank’s net interest margin (NIM) increased to 5.89% from 5.50%.

The gross non-performing assets (NPAs) of the bank decreased from 4.61 percent a year earlier to 3.36 percent of the gross loans in the June 2022 quarter, indicating an improvement in asset quality. Additionally, the net NPAs decreased from 2.32 percent to 1.30 percent.

“With PAT increase of 38% QoQ, IDFC FIRST Bank’s (IDFCFB) Q1FY23 results were much higher than I-Sec and consensus projections. After delivering RoA, the core operational profit trajectory of Rs 10 billion (up 18 percent QoQ/64 percent YoY) inspires confidence in the projected RoA/RoE, according to a report from ICICI Securities.

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IDFC First Bank shares: Expected Return in FY23

In FY23, IDFC First Bank expects its retail GNPA to be less than 2 percent and its credit cost to be 1.5 percent. The brokerage, which has maintained its buy rating on the bank stock with an unchanged target price of 59 per share and views an elevated cost structure as a significant risk, said that the current RoE profile is burdened by high cost structure, loss in retail liabilities, and credit card operations.

“In Q1FY23, we reported the biggest profit after taxes ever, at 474 crore. Our return on assets has almost reached 1%, and we anticipate it to continue to increase “CEO and Managing Director of IDFC FIRST Bank, Vaidyanathan, remarked

The price of IDFC First Bank shares has decreased by over 21% year-to-date (YTD) in 2022, compared to a fall of approximately 25% over a 12-month period.

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