IDFC First Bank Maintains Neutral Rating, Targets Rs 75: Motilal Oswal

IDFC First Bank Reports Mixed Quarter, Beats Estimates Amid Tax Reversal

IDFC First Bank (IDFCFB) has reported its financial results for the fourth quarter of fiscal year 2026 (4QFY26). The bank's Profit After Tax (PAT) for the quarter stood at INR3.19 billion, marking a 4.9% year-over-year (YoY) increase and a 37% quarter-over-quarter (QoQ) decline.

The bank's PAT beat the estimates of Motilal Oswal Financial Services Limited (MOFSLe) by a significant 99% due to a favorable tax order that resulted in a tax reversal of INR1.7 billion. However, the bank's treasury operations incurred a loss of INR1.6 billion, while other income realized a loss of INR2.7 billion, accompanied by a corresponding release in provisions. Additionally, the bank reported a loss of INR6.5 billion due to a deposit fraud in the Chandigarh branch.

Earnings Estimates Revised, Neutral Rating Maintained

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Motilal Oswal's research report has revised the bank's earnings estimates for fiscal year 2027 and 2028, with a 1% and 4% decrease in earnings, respectively. The report also estimates a return on assets (RoA) and return on equity (RoE) of 0.8% and 7.6% for fiscal year 2027, respectively. The research firm has maintained its Neutral rating on the bank with a target price of INR75, premised on 1.2 times the bank's adjusted book value (ABV) as of September 2027.

Note: The table above presents a summary of the revised earnings estimates for IDFC First Bank.