Morgan Stanley has maintained an ‘Equal-weight’ rating on IDFC First Bank with a target price of ₹58, indicating a 9% upside potential from the current market price of ₹53.30. The brokerage’s stance follows key insights from a recent management meeting, where the bank provided updates on asset quality, loan growth, and margin outlook.
The bank noted that microfinance (MFI) asset quality trends remain volatile but have improved in March 2025. However, credit costs are expected to peak in Q4FY25/Q1FY26 before stabilizing. On the deposit growth front, IDFC First Bank aims for a 24%-25% YoY increase, while loan growth could see some moderation, in line with previous guidance.
Looking ahead, the bank expects its MFI loan mix to gradually decline over FY26, while margins may face short-term pressure due to a continued slowdown in the MFI loan book, a potential rise in wholesale lending, and anticipated repo rate cuts. Despite these factors, Morgan Stanley remains neutral on the stock, seeing limited near-term upside.
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