Quote on IDFC First Bank Ltd by Mr. Jyoti Roy, Angel Broking Ltd
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Below is quote on IDFC First Bank Ltd by Mr. Jyoti Roy - DVP- Equity Strategist, Angel Broking Ltd
IDFC First Bank reported a 34.4% YoY increase in Net interest income for Q1FY22 to Rs. 2,185 crore on the back of 10.9% YoY growth in advances while NIM’s for the quarter were up by 43bps qoq to 5.51% due to a 63bps decline in cost of funds sequentially. Other income was up by 75.1% YoY to Rs. 849 crore while operating expenses were up by 66.7% YoY. As a result pre provisioning profits were up by 12.3% YoY to Rs. 1,001 crore. Provisioning for the quarter was up by 145.9% YoY and 211.7% QoQ to Rs. 1,879 crore due to high slippage from the retail portfolio. As a result the company posted a loss of Rs. 630 crore for the quarter. Due to the second Covid wave there was a spike in GNPA and NNPA for the quarter to 4.61% and 2.32% from 4.15% and 1.86% in Q4FY21. During the quarter the Bank reported slippages of ~Rs. 2,800 crore of which roughly Rs. 1,800 came from retail assets.
While slippages and credit costs at 1.73% were elevated for the quarter due to the second Covid wave the management has indicated that credit costs for the full year will be limited to ~2.5% which indicates sharp decline in incremental stress going forward. At current levels the stock is trading at 1.2xFY23 Abj. BVPS which we believe is inexpensive. Post the Q1FY22 numbers we maintain our BUY rating on IDFC First bank with a revised price target of Rs. 64 as we believe that the worst of the Covid related impact is now behind for the company.
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