IDFC First Bank (IDFCFB IN) Initiate at Buy: Multi-year growth, ROA expansion to create value

研报英文原文证据摘录

IDFC First Bank (IDFCFB IN) Initiate at Buy: Multi-year growth, ROA expansion to create value

Equities ● Commercial Banks

8 June 2026

Investment thesis

◆ Multi-year loan growth aided by diversification, a resurgence in some

segments, and developing a strong liability franchise

◆ Focused efficiency gains in liabilities and credit cards, and higher

growth in secured segments to aid lower cost-to-income ratio

◆ ROA expansion and achievement of key near-term milestone of 1%

exit ROA in FY27e should provide confidence in earnings resilience

IDFCFB is a play on multi-year loan growth and positive operating jaws due to significant

operating leverage which is yet to manifest. The bank has been delivering best-in-class and broad-

based loan growth and matching that with strong growth in deposits while maintaining a high-

quality deposit franchise. This has also been accompanied by stronger fee income contribution

and improving asset quality. However, the key issue with IDFCFB has been its high cost structure

(c72% normalised cost/income ratio, c5.7% normalised cost/asset ratio as of FY26). This leads to

a significantly weaker ROA / ROE profile when compared to peers. Management has been

addressing the cost concern for two years now, and we believe sustained delivery will lead to

lower operating expense growth, and core-PPOP and ROA expansion. This, along with a c20%

loan growth CAGR, should lead to strong earnings growth. We initiate coverage on IDFCFB with a

Buy rating and a TP of INR90 (valuing it at 1.4x FY28e BVPS).

Our investment thesis for IDFCFB includes:

◆ Efficiency gains to be the key ROA and value driver

◆ Strong deposit franchise to aid growth, competitiveness

◆ Multi-year loan growth with diversification and resurgence in some segments