IDFC First Bank Limited - First Bank Preference for Long Term Investors too?

[Deepak_R]

I was upset when the management raised so much capital again, almost called them names like dodo bank and so on. My posts looked like a campaign not to approve the resolution.

But now in hindsight i feel like eating my words raising the money was a good thing.

In my mind their credibility is their biggest strength otherwise noone can raise capital in the formative stage of a Bank.

I cant think of any management being able to raise 20000 cr on a weak financials.

I saw an analysis of mid tier banks stock price from twitter(x) from date of merger about 15 days ago pre war. This stock has doubled from 37 as per that analyst compared to indusind bandhan yes and rbl all mid tier banks which are down 30 to 60 pc.. will validate the prices from nse and then post here.

Large banks like hdfc kotak havr been kinda flat and axis is moderate. Icici stock did well.

Lets see how they perform next 3 years even if the first 5 years were foundation years.

[Ragnar_Danneskjold]

483714e2-9605-4644-bee7-6208ad6716c7.pdf (315.3 KB)

Good - Deposits are not drastically impacted by the fraud.

Bad - Loan and Deposits growth was anyways slowing down, is management finally has the wisdom to give equal importance to profit and growth?

Will the bank get valuations like federal bank was valued historically as it is posting growth number like federal bank now…

Views on this quarterly update…??

[diffsoft]

The 0.6% q-o-q growth in deposits can be broken into two halves; the period before the fraud announcement on 22 Feb 2026; and the period after until 31 March. Just a plain viewing of the 0.6% growth suggests there was a decline in deposits after the incident.

If IDFC First deposits were growing at the same pace as the Dec quarter of 5% until 62 days of the quarter, then from that peak once can estimate about 2.65% decline in the balance 28 days (or 1/3rd)

[rpm]

It appears from Screener that the FII and DII holdings in the bank have gone up and retail holdings have gone down. Does it indicate stronger hands replacing weaker hands ?

[ravindra12]

44f5dbfe-6966-4990-8bf8-968891b67acf.pdf

Surprising to see 319 Cr profit. They recognized 645+ Cr paid to Haryana Govt as expense.

[rpm]

Two relatively junior Haryana govt employees have been dismissed under presidential powers. This power is generally used for very senior employees to avoid prolonged litigation and publicity. It appears that if the Haryana govt wants, it can freeze the stolen money and facilitate its return to the bank. It might be in the process.

IDFC bank also needs to drop its soft and goody goody image. The primary responsibility of the bank management is to protect the shareholders and depositors’ interest. It must go after the defaulters and scamsters and it should be visible. Money Lenders never try to win popularity contests, if they want to do their job with responsibility.

[Shikhar_Gupta]

Q4 numbers are mixed.

Good on the operating leverage front and NPAs

Poor on the deposit growth

The fraud hit has been considered in operating expense.

Hopefully from Q1, growth should be better.

Disc. Invested for long time

[Deep_Sukhwani]

Reading through their concall transcript, I couldn’t help but wonder again why the bank declared ₹0.25/share dividend — minuscule in rupee terms, but destructive nonetheless.

Management explicitly acknowledged in the Q&A that they “definitely” need more capital this year. In Q1 FY26, they raised ₹7,500 crores via equity. The sequence — raise equity at 1.3x book, dilute existing shareholders, then return a token dividend, then raise again — is wealth destruction in slow motion.

Returning ₹176 crores to retail shareholders as a “signal of strength,” only to immediately turn around and dilute the equity base by issuing 125 crore new shares (a ~17% dilution) at 1.3x book value, is mathematically destructive to existing minority shareholders.

Shouldn’t a bank earning 4% ROE should retain every rupee of earnings and use it to self-fund growth, not perform theatrical generosity to retail investors who interpret a dividend as a signal of strength? I mean such investors should ideally look for businesses generating ample cash with no where to deploy and hence significant payouts as dividend.

What’s more pinching is RBI recently introduced new dividend guidelines capping payouts at 75% of PAT (effective FY26-27), explicitly linking dividends to net NPA ratios and CET-1 capital strength. RBI’s clear intent is that banks should prioritize capital retention over payouts. IDFC First’s choice to pay a dividend while simultaneously needing ₹7,500 crore in rescue capital seems counter to the spirit of this prudential discipline. What if regulator wakes up to this and feels like doing something about it?

The one thing I noticed is the Q-o-Q credit cost trajectory: 2.69% → 2.24% → 2.05% → 1.63% through FY26. Seems a genuine trend. If FY27 sustains 1.7–1.8% credit cost and NII grows 18%+ as guided while opex stays at 13%, the PAT could approach ₹3,500–4,000 crore. At that level, earnings yield on current market cap (59,910 crores) starts to matter.

But paying today a P/B of 1.3x on an asset earning sub-hurdle (read: 10-year-risk-free-rate) ROE, betting on a 2-year rerating that depends on:

• deposit drag normalizing
• no more operational risk events (one fraud already),
• MFI staying contained,
• and no macro shock to their consumer/MSME mix.

That’s four conditional bets stacked together for a sub-8% earnings yield entry.

What further compounds skepticism is irrational dividend-then-raise absurdity.

[manishdhariwal]

Dividend is more of a hurdle clearing step - needs to cross the hurdle of a dividend paying bank. if you could give less than 25 paise, vedi would have done that. The bank has consistently faced curve balls - and these are not from outside, but a result of internal weakness - who asked them to go whole hog on MFI, no other universal bank got their numbers dragged like IDFC. Then this fraud - who else can be hele responsible but the management itself.. the cost of all these fracas is borne by us poor shareholders who see their holding diluted at low levels. On the credit side is the admirable NIMs, unbelievable CASA and growth (which is tapering). The valuation is reflecting the low profitability and increased capital base. unless Vedi thinks about these issues, the bank will take 1 step ahead and 2 back..

[Nitin_Nimkar]

[rpm]

Unexpected good news after a really long time.

There was a full provision made of approx 800 crores for a toll road outside Mumbai in Maharashtra due to Maharashtra govt suspending toll collection due to covid. We have not heard further about that NPA. I am sure the outstanding amount must have been paid back to the bank by now, after traffic situation normalised after covid.

There is also no feedback about the Haryana fraud. Shareholders deserve to know whether the money is coming back ??

[billubadshah]

Surprisingly all good news are coming, looks like a way to prop up the price for a good fund raise:0

[Nitin_Nimkar]

Major Indian banks collectively spent over ₹2,700 crore on printing and stationery. Despite digitization, large volumes of physical passbooks, KYC forms, and deposit slips drive massive paper costs. The State Bank of India (SBI) alone spent ₹986 crore, amounting to ₹2.7 crore daily.

A recent analysis highlighted the massive scale of these administrative and operational costs across the sector.

• State Bank of India (SBI): ₹986 crore (approx. 1.22% of net profit)

• HDFC Bank: ₹922 crore

• ICICI Bank: ₹274 crore

• Axis Bank: ₹226 crore

• IDFC First Bank: ₹123 crore (accounting for a notable 8.05% of its net profit)***