IDFC needs many stars to align

Cost pinch IDFC First Bank's elevated cost-to-income ratio and credit costs put pressure on its profit

- Manish Joshi

Private-sector lender IDFC First Bank Ltd has put up a dismal show and seen its shares tank around 26% so far this calendar year. In contrast, the Nifty Bank index is up around 8%.

The stock has been punished for a multitude of factors. Provisions have seen a linear increase from ₹528 crore in Q2FY24 to ₹1,732 crore in Q2FY25.

An even more worrying aspect is that the jump in provisions was higher in absolute terms than the increase in net interest income (NII). The bank's NII rose by ₹838 crore over this period to ₹4,788 crore in Q2FY25.

The stock slid to a new 52-week low of ₹59.30 in October and has since recovered marginally to ₹64, but remains well below its 52-week high of ₹92.45 in December 2023.