Credit Suisse downgrades IDFC First Bank to underperform
IDFC First bank has posted a net loss of Rs 218 crore for the fourth quarter due to high provisioning
By ET Bureau | Updated:
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Mumbai: Credit Suisse has downgraded IDFC First Bank to underperform from neutral after the bank reported a loss for the quarter ended March. The target price is unchanged at Rs 40.
The bank has posted a net loss of Rs 218 crore for the fourth quarter due to high provisioning, against a net profit of Rs 41.9 crore in the same period a year ago.
"While it continues to rejig asset book in the favour of better yielding retail assets and improve CASA franchise, higher SA costs will cap margin expansion. We expect RoEs to remain in single digit even in FY21 and cut FY20/21 EPS by 30%/27% on slower-thanexpected earnings revival," said Credit Suisse.
"With the stock up 40% in six months and valuation at 1.3 times FY20, downgrade to underperform," it added.
Growth was muted and is likely to remain modest over the next couple of years, as the bank looks to reorganise its balance sheet, said Credit Suisse.
The bank has posted a net loss of Rs 218 crore for the fourth quarter due to high provisioning, against a net profit of Rs 41.9 crore in the same period a year ago.
"While it continues to rejig asset book in the favour of better yielding retail assets and improve CASA franchise, higher SA costs will cap margin expansion. We expect RoEs to remain in single digit even in FY21 and cut FY20/21 EPS by 30%/27% on slower-thanexpected earnings revival," said Credit Suisse.
"With the stock up 40% in six months and valuation at 1.3 times FY20, downgrade to underperform," it added.
Growth was muted and is likely to remain modest over the next couple of years, as the bank looks to reorganise its balance sheet, said Credit Suisse.
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