IDFC First Bank was listed on the NSE on November 6, 2015. In the last five years, the company has given its investors a massive return of more than 190%. Will IDFC First Bank also continue to provide such great returns in the future? Let’s explore IDFC First Bank’s growth potential and IDFC First Bank share price target 2025 to 2050 in this article.
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About IDFC First Bank
IDFC First Bank is a private Indian bank that was established in December 2018 through the merger of IDFC Bank and Capital First. It offers savings accounts, loans, and credit cards to both individuals and businesses. The bank focuses on providing customer-friendly services, such as digital banking and competitive interest rates. It aims to support small businesses and entrepreneurs while also offering retail banking services.
IDFC First Bank Business Model
- Interest on Loans: The bank makes loans to individuals and businesses and charges them interest. This interest is the primary source of income.
- Retail Banking: The bank provides savings, current accounts, and fixed deposits. It makes money by using customer deposits to make loans at higher interest rates.
- Credit Cards: The bank issues credit cards and earns money by charging interest, late fees, and transaction fees.
- Service Charges and Fees: The bank charges fees for a variety of services, including account maintenance, ATM withdrawals over the free limit, fund transfers, and chequebook issuance.
- Wealth Management: The bank advises customers on mutual funds, insurance, and other financial products. It earns a commission for these services.
- Investment in Government Bonds: The bank invests in government and corporate bonds, earning interest on its investments.
- Digital Banking Services: The bank generates revenue by transaction fees, payment gateway charges, and UPI-based transactions.
- Foreign Exchange and Trade Services: The bank generates revenue using conversion charges and service fees by allowing currency exchange, international money transfers, and trade finance.
- Treasury Operations: The bank invests in the stock market and other securities to generate profits by trading and investing.
IDFC First Bank Fundamental Analysis
| Stock Name | IDFC First Bank Ltd. |
|---|---|
| NSE Symbol | IDFCFIRSTB |
| Market Cap | ₹ 40577 Cr. |
| 52W High | ₹ 86.1 |
| 52W Low | ₹ 52.6 |
| Stock P/E | 21.1 |
| Book Value | ₹ 51.6 |
| Dividend Yield | 0.00 % |
| ROCE | 6.93 % |
| ROE | 10.1 |
| Face Value | ₹ 10.0 |
| Shareholders | Mar 2023 | Mar 2024 | Dec 2024 |
|---|---|---|---|
| Promoters | 39.99% | 37.43% | 0.00% |
| FIIs | 19.31% | 23.65% | 27.12% |
| DIIs | 7.69% | 6.79% | 16.14% |
| Government | 3.98% | 3.72% | 9.17% |
| Public | 29.05% | 28.38% | 47.57% |
| No. of Shareholders | 17,07,479 | 26,11,512 | 32,94,939 |
Key Factors Driving IDFC First Bank Future Growth
- Strong Loan Growth: IDFC First Bank’s loan book is growing, particularly in the retail and MSME (Micro, Small, and Medium Enterprises) parts, which could boost future earnings.
- Improving Asset Quality: IDFC First Bank is reducing bad loans and improving recovery, building its financial position.
- Increasing CASA Ratio: IDFC First Bank is growing its low-cost deposits (Current Account and Savings Account), which helps to reduce funding costs and increase profits.
- Rising Digital Banking Services: IDFC First Bank is investing in technology to improve online banking services, attract new customers, and reduce operations.
- Branch Expansion Strategy: IDFC First Bank’s branch expansion plan includes opening new branches in various regions to reach more customers and increase deposits.
- Growing Credit Card Business: IDFC First Bank is growing its credit card offerings, resulting in increased fee income and customer base growth.
- Focus on Retail Banking: IDFC First Bank is shifting its focus from infrastructure lending to retail loans, which are safer and more profitable long term.
- Improving Profitability: IDFC First Bank has transitioned from losses to profits, showing important financial improvement that may attract more investors.
- Strong Leadership: IDFC First Bank’s management team is experienced and committed to long-term growth and stability.
- Government and regulatory support: IDFC First Bank benefits from India’s growing financial sector and government policies to motivate banking expansion.
- Corporate Loan Growth: While focussing on retail, IDFC First Bank keeps growing its corporate loan book to maintain a balanced portfolio.
- Innovative Products and Services: IDFC First Bank is introducing new banking products such as zero-fee accounts to attract customers.
- Increasing Brand Trust: IDFC First Bank is building a strong reputation through customer-friendly policies, which may lead to increased customer loyalty.
- Partnerships and Collaborations: IDFC First Bank partners with fintech companies and other businesses to broaden its reach and provide better services.
- India’s Economic Growth: As India’s economy expands, more people require banking services, which can help IDFC First Bank grow more quickly.
Pros of IDFC First Bank
- Strong Sales Growth: IDFC First Bank has achieved a strong sales growth of 24% CAGR over the past three years.
- Strong Profit Growth: IDFC First Bank has achieved a strong profit growth of 84% CAGR over the past three years.
- Low P/B Ratio: IDFC First Bank has a low Price to Book Value (P/B) ratio of 1.07, which indicates that the stock is trading close to its intrinsic value and may be undervalued.
- Increase in Institutional Confidence: DIIs have increased their holding to 16.14% in December 2024 from 11.73% in September 2024 while FIIs have increased their holding to 27.12% in December 2024 from 19.57% in September 2024, indicating a strong institutional confidence in IDFC First Bank’s future growth prospects.
Cons of IDFC First Bank
- Low Return on Equity (ROE): With a five-year average ROE of 3.02%, IDFC First Bank shows poor use of shareholder capital to generate profits.
- Low Return on Capital Employed (ROCE): With a five-year average ROCE of 5.94%, IDFC First Bank shows poor capital use to produce profits.
- Overvaluation Concern: Trading at a PE ratio of 21.1, IDFC First Bank is fairly higher than the industry average of 10.4, suggesting the stock could be overvalued in comparison to other banks.
| Years | Target Price |
|---|---|
| IDFC First Bank Share Price Target 2025 | ₹70 to ₹85 |
| IDFC First Bank Share Price Target 2026 | ₹80 to ₹110 |
| IDFC First Bank Share Price Target 2027 | ₹100 to ₹145 |
| IDFC First Bank Share Price Target 2028 | ₹120 to ₹190 |
| IDFC First Bank Share Price Target 2029 | ₹140 to ₹245 |
| IDFC First Bank Share Price Target 2030 | ₹170 to ₹320 |
| IDFC First Bank Share Price Target 2035 | ₹350 to ₹960 |
| IDFC First Bank Share Price Target 2040 | ₹690 to ₹2860 |
| IDFC First Bank Share Price Target 2050 | ₹2760 to ₹17170 |
Disclaimer
This article is for educational purposes only. It is not a stock recommendation and should not be treated as such. Please ask your financial advisor before making any investment decision.
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