IDFC First Bank Upgraded to 'Hold' Rating by MarketsMOJO, Strong Lending Practices and Attractive Valuation Key Factors

IDFC First Bank, a largecap private bank, has recently been upgraded to a 'Hold' rating by MarketsMOJO. This decision is based on the bank's strong lending practices, with a low Gross NPA ratio of 2.51%. Additionally, the bank has shown a strong long-term fundamental strength, with a 35.17% CAGR growth in net profits. Its net interest income has also grown at an annual rate of 40.84%, while net profit has grown at 35.17%.
One of the key factors contributing to the 'Hold' rating is the bank's attractive valuation, with a price to book value of 1.7 and a ROA of 1. This is further supported by the fact that the stock is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 17.99%, while its profits have risen by 21.3%. The PEG ratio of the company stands at 1.4.

Another positive aspect of IDFC First Bank is its high institutional holdings at 34.18%. This indicates that these investors have better capability and resources to analyze the fundamentals of the company compared to most retail investors.

However, the bank's results for March 2024 have been flat, with the credit deposit ratio at its lowest at 97.02% and PBDIT(Q) at Rs 21.91 crore. The operating profit to net sales(Q) is also at its lowest at 0.27%. Technically, the stock is currently in a mildly bearish range, with the technical trend deteriorating from mildly bearish on 08-May-24. The MACD and Bollinger Band technical factors are also bearish.

In the last year, IDFC First Bank has underperformed the market, generating a return of 17.99% compared to the market (BSE 500) returns of 31.64%. This could be a cause for concern for investors, but the overall fundamentals and valuation of the bank still make it a 'Hold' for now.