Hold the Applause: IDFC First Bank’s Profit Dips, But Fundamentals Hold Firm

Image Source: Business Today

IDFC First Bank has found itself in the spotlight following a steep 58% quarter-on-quarter fall in Q4 FY25 net profit to ₹304 crore, below analyst estimates and raising doubts for investors.

Key Highlights:

Profit Dented by Microfinance Troubles: The decline in the profit was largely caused by increased provisions for bad loans in the microfinance book, with new slippages of ₹572 crore. The bank is aggressively de-growing this portfolio, which now stands at only 4% of the total loans.
Core Strengths Undertone: Net Interest Income increased 9.8% to ₹4,907 crore, and deposits rose 25.2% year over year. Asset quality excluding microfinance firmed up, with Gross NPA at 1.87% and Net NPA at 0.53%.
Dividend Declared: Board announced a ₹0.25 per share final dividend, signaling faith in the bank's fundamentals.
Brokerage Verdict – Hold: Most brokerages advise holding the stock, highlighting stable core operations, but warning of a need for better quality assets and profitability before re-rating.

Investor Takeaway:

Fundamentals of IDFC First Bank are still strong, although microfinance stress overhangs the situation. Analysts predict holding until the recovery becomes clearer.

Sources: Moneycontrol, Economic Times, Financial Express