IDFC First Bank share price dips 5% after disappointing Q2 results 2024. Opportunity for bottom fishing?

Stock market today: After the announcement of disappointing Q2 results 2024 on Saturday last week, IDFC First Bank's share price today opened with a downside gap at ₹61.01 apiece on the NSE and touched an intraday low of ₹59.30 apiece. While hitting this intraday low, IDFC First Bank share price recorded an intraday loss of more than 5 per cent during Monday morning deals.

According to stock market experts, IDFC First Bank shares are nosediving after the announcement of disappointing Q2 2024 results on Saturday. They said that the bank's net profit had gone down during the July to September 2024 quarter due to a rise in provisions. Global brokerage Jefferies believes that the dip in IDFC First Bank shares is an opportunity for bottom fishing, giving a target price of ₹85 in the long term.

IDFC First Bank Q2 results 2024 review

On reasons that are dragging IDFC First Bank shares, Anshul Jain, Head of Research at Lakshmishree Investment and Securities, said, “IDFC First Bank’s September quarter results revealed a challenging phase, with a sharp 73% drop in standalone net profit to ₹201 crore from ₹751 crore a year earlier. Despite a 21% rise in Net Interest Income (NII) to ₹4,788 crore, up from ₹3,950 crore, the bottom line was heavily impacted by significant provisions, totaling ₹568 crore. This included ₹315 crore in provisions for the Microfinance Institution (MFI) segment, which faced industry-wide stress, and ₹253 crore for a toll account in Maharashtra, highlighting potential ongoing credit risk.”

“While the bank’s loans and advances grew by 21.5% year-on-year to ₹2,22,613 crore, driven by a strong retail lending performance, its legacy infrastructure exposure declined by 21%, indicating a continued effort to derisk. However, the bank's Gross NPA ratio, though improved from 2.11% to 1.92% year-on-year, still signals caution, especially amid macroeconomic uncertainties that could weigh on loan quality,” Anshul added.

Anshul Jain of Lakshmishree Investment and Securities said that IDFC First Bank's reduction in the MFI portfolio as a percentage of the total loan book (from 6.3% in June 2024 to 5.6% in September 2024) reflects a cautious stance. Still, the industry pressure in this segment may continue to impact near-term profitability. Given the elevated provisioning and potential credit challenges, the bank’s earnings outlook may remain weak, suggesting a bearish sentiment in the near term as IDFC First navigates ongoing risks.

IDFC First Bank share price target

Global brokerage Jefferies said, expecting a rebound in IDFC First Bank shares, “IDFC First's profit for 2QFY25 fell by 73% YoY to Rs2bn due to surge in credit cost for MFI book. Deposits +31% YoY, Loans +21%, LDR -c780bps, NII up 21% & op. profit +27%. Also, quality of other retail loan has held-up well as SMA-1&2 down/stable QoQ. We cut earnings for FY25 by 35% and FY26-27 by 9-18% to factor higher credit cost and tad slower loan growth.”

However, Jefferies reduced IDFC First Bank share price target from 95 to ₹85 in the long-term.

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