IDFC First Bank share price falls 2% ahead of Q4 results. What does this mean for investors? Discover whether you should buy, sell, or hold IDFC First Bank shares based on expert analysis
IDFC First Bank has seen a significant rally in its share price over the past month, rising by 15%, and up by 2.4% on a year-to-date (YTD) basis. However, its shares took a hit recently, dropping by more than 2% as investors await the Q4 results. With the stock currently trading at ā¹66.12, it is important for investors to weigh their options before making any moves.
What Happened to IDFC First Bank Share Price?
On Friday, April 25, IDFC First Bank share price plunged by as much as 2.88%, closing at ā¹65.68 on the Bombay Stock Exchange (BSE). This decline came ahead of the bankās Q4 results, which will be announced on April 26. Investors have been looking to make their decisions before the results come out, as the market anticipates a sharp year-on-year (YoY) fall in net profit for Q4FY25.
The fall in share price was likely driven by investor caution ahead of the anticipated results. While there has been strong growth in the bankās business, analysts predict elevated provisions and a slight deterioration in asset quality could impact the bankās earnings for the quarter.
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What to Expect from IDFC First Bankās Q4 Results?
The bank is expected to see a significant 46.2% drop in its net profit for the January-March 2025 quarter, dropping from ā¹724 crore to ā¹389 crore YoY. This decline is attributed to higher provisions, which are estimated to rise by 88.2% YoY, reaching ā¹1,359 crore.
Net interest income (NII), on the other hand, is expected to see a solid increase of 12.8%, rising from ā¹4,469 crore to ā¹5,039 crore. Analysts also predict that IDFC First Bankās pre-provisioning operating profit (PPOP) will grow 12.2% YoY to ā¹1,867 crore.
Despite the overall decline in net profit, the bankās loan and deposit growth remains healthy. Loan growth is expected to rise by 20.4%, while deposit growth is projected to increase by 24.7% during Q4FY25.
IDFC First Bank Share Price Outlook: Should You Buy or Sell?
Given the marketās reaction and the outlook for Q4 results, analysts are divided on whether now is a good time to buy IDFC First Bank shares. Hereās a breakdown of expert opinions:
Broker Recommendations:
- Motilal Oswal (MOFSL) has a āNeutralā rating on IDFC First Bank shares with a target price of ā¹65 per share. Analysts believe that the stockās recent price correction might be limited, and investors can consider using any dips as a buying opportunity.
- Ruchit Jain, Vice President at Motilal Oswal, suggested that the stock has strong support around ā¹60-62. Traders may consider a ābuy on dipsā strategy, especially if the price approaches this support level. Jainās target price for IDFC First Bank shares is ā¹71.
Pros of Buying IDFC First Bank Shares:
- Strong Growth in Business: Despite a short-term dip, the bankās business growth is strong, with both advances and deposit growth expected to remain healthy in Q4.
- Multibagger Returns: Over the past five years, IDFC First Bank has delivered exceptional returns of 195%, making it a top performer in the private banking sector.
- Healthy Loan Growth: The bankās loan growth of 20.4% during Q4 is an encouraging sign, indicating strong demand for credit.
Cons of Buying IDFC First Bank Shares:
- Elevated Provisions: High provisions for potential loan losses are expected to weigh on the bankās profitability in Q4.
- Deteriorating Asset Quality: The bankās non-performing assets (NPA) ratio is expected to rise, which could negatively impact investor sentiment in the short term.
- Declining Net Profit: A sharp YoY decline in net profit for Q4 may lead to temporary market volatility and could make some investors wary.
Long-Term Outlook: Is IDFC First Bank a Good Investment?
Over the long term, IDFC First Bank has demonstrated solid growth. It has posted a 12% gain in two years and a 195% increase over five years. Despite some short-term volatility and a slight dip in the current quarter, the bankās strong fundamentals, business growth, and potential for recovery make it an attractive long-term investment.
Investors should weigh the pros and cons carefully. If you are a long-term investor, buying IDFC First Bank shares on dips could offer significant upside potential as the stock reaps the benefits of strong business growth and solid returns.
Conclusion:
IDFC First Bank share price has faced some volatility ahead of its Q4 results, with a recent drop of over 2%. While the short-term outlook may appear uncertain, the stock remains an attractive option for long-term investors. With a healthy business growth trajectory, a strong multibagger track record, and a recovery strategy in place, IDFC First Bank offers a favorable risk-reward opportunity for investors.
External News Sources:
- Motilal Oswal Financial Services ā Source Link
- Axis Securities ā Source Link
- BSE Market Trends ā Source Link
- The Economic Times ā Source Link
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of NSENEWS. We advise investors to check with certified experts before making any investment decisions
