BoFA Securities has downgraded IDFC First Bank to Neutral and reduced its target price to Rs 75 from Rs 95 per share, citing the potential fallout from the recently disclosed fraud. The brokerage believes the incident could weigh on key operating metrics in the near to medium term.
According to BoFA Securities, the fraud is likely to disrupt deposit growth, increase the cost of funds and moderate loan growth. The brokerage also expects higher operating expenditure as the bank undertakes corrective measures, strengthens internal controls and manages reputational risks.
Reflecting these concerns, BoFA has cut its FY27 earnings per share estimates by 13 per cent. It noted that clarity on the final financial impact and the pace of recovery in liabilities and asset growth will be critical for any improvement in investor sentiment.
The brokerage added that a potential re-rating of the stock is likely to be delayed until full clarity emerges regarding the impact of the fraud and the bank’s remediation measures.
Disclaimer: The views and investment tips expressed above are those of the brokerage and do not represent the views of this publication. This article is for informational purposes only and does not constitute investment advice.