IDFC First Bank Downgraded to 'Sell' by MarketsMOJO, Despite Strong Lending Practices and Long-Term Growth

IDFC First Bank, a largecap private bank, has recently been downgraded to a 'Sell' by MarketsMOJO on October 3rd, 2024. This decision was based on several factors, including the bank's flat results in June 2024, with a credit deposit ratio of 96.61% and a PBT less OI of Rs -731.10 crore. Additionally, the bank's PAT has fallen by -7.9% to Rs 680.65 crore.
Technically, the stock is in a bearish range and has generated -1.92% returns since October 3rd, 2024. Multiple indicators, such as MACD, Bollinger Band, and KST, also suggest a bearish trend for the stock.

In the long term, IDFC First Bank has underperformed the BSE 500 index, with a return of -23.42% in the last year. However, the bank has strong lending practices, with a low gross NPA ratio of 2.51%. It also has a strong long-term fundamental strength, with a CAGR growth of 85.53% in net profits.

Furthermore, the bank has shown healthy long-term growth, with an annual growth rate of 37.25% in net interest income (excluding other income) and 85.53% in net profit. With a ROA of 0.9, the stock is currently trading at an attractive valuation of 1.6 times its book value. It is also trading at a discount compared to its historical valuations.

Despite the recent negative performance of the stock, it is worth noting that its profits have still increased by 5.3% in the past year. Additionally, IDFC First Bank has a high institutional holding of 34.18%, indicating that these investors have better capabilities and resources to analyze the bank's fundamentals compared to retail investors.