IDFC First Bank Share Price Soars Nearly 4% After Investec’s Buy Upgrade

IDFC First Bank stock hits an 11-month high, driven by positive brokerage upgrades and strong FY26 growth expectations in India’s banking sector.

A Stellar Surge in IDFC First Bank Stock

IDFC First Bank shares climbed nearly 4% on July 1, 2025, reaching an 11-month high of ₹76.46 on the National Stock Exchange (NSE). The stock’s rally was fueled by a bullish upgrade from global brokerage Investec, which raised its rating to Buy from Hold, setting an ambitious target price of ₹90, implying a potential upside of over 20%. This surge has positioned IDFC First Bank as a standout performer in the Nifty Bank index, capturing investor attention amid a volatile stock market.

The stock closed at ₹75.09 on the NSE, up 3.04% from its previous close of ₹72.36, with trading volume reaching 179.89 lakh shares, compared to a one-month average of 316.86 lakh shares. This uptrend follows a 5.38% weekly gain and an 11.71% monthly rise, despite a 6.46% decline over the past year.

Key Factors Driving the Rally

Several factors contributed to the IDFC First Bank share price surge:

• Brokerage Upgrade: Investec upgraded the stock to Buy, citing a projected 29% core pre-provision operating profit (PPOP) compound annual growth rate (CAGR) over FY25–28. The brokerage highlighted the bank’s improving return on equity (RoE) and strong loan growth potential, bolstered by a recent ₹75 billion capital infusion. This move enhances visibility for sustained growth without significant dilution of book value.
• Robust Financial Outlook: Despite a challenging Q4 FY25, where net profit fell 59.61% year-on-year to ₹295.6 crore, IDFC First Bank reported a full-year net profit of ₹1,490.35 crore and revenue of ₹36,501.49 crore. The bank’s net interest margin (NIM) stood at 5.95%, though it contracted 9 basis points quarter-on-quarter due to stress in the microfinance (MFI) segment. Analysts expect credit costs to moderate from Q1 FY26, with CEO V. Vaidyanathan projecting a recovery in asset quality and profitability.
• Strategic Growth Plans: The bank is targeting 20% loan growth and 25% deposit growth over FY24–29, driven by its diversified portfolio in retail banking, corporate banking, and wealth management. Recent initiatives, such as insuring 70% of its MFI book by March 2025 and expanding digital offerings like UPI and FASTag, underscore its focus on innovation and customer-centric services.
• Market Sentiment: Posts on X reflect bullish sentiment, with traders noting a breakout above the 200-day simple moving average (SMA) and projecting target prices of ₹80–100 for positional trades. Technical indicators, including a supportive MACD and demand zone breakout, suggest a buy trajectory for the stock.

Analyst Ratings and Price Targets

Analyst views on IDFC First Bank are mixed but lean positive. Of 24 analysts covering the stock, 11 recommend Buy, six suggest Hold, and seven advise Sell. The median target price is ₹71.47, slightly below the current price, with a high estimate of ₹87 and a low of ₹49.

• Investec: Upgraded to Buy with a ₹90 target, citing strong growth and operating leverage.
• Motilal Oswal: Maintains a Neutral rating with a ₹73 target, noting higher provisions but stable operating profit.
• Morgan Stanley: Assigns an Equal-weight rating with a ₹65 target, expecting a return on assets (RoA) rebound to 1.1% by FY27.
• JPMorgan: Upgraded to Neutral from Underweight with a ₹50 target, citing challenges in credit costs and cost of funds.
• Nuvama: Maintains Hold with a reduced target of ₹60, cutting FY25–26 earnings estimates due to MFI stress.

The stock’s price-to-earnings (P/E) ratio is 34.13 based on trailing twelve-month (TTM) earnings, higher than the sector average of 8.87, reflecting premium valuations. Its market capitalization stands at ₹53,414 crore, with a price-to-book (P/B) ratio of 1.2x FY27E.

Challenges and Risks

Despite the rally, IDFC First Bank faces challenges:

• Microfinance Stress: The MFI segment saw a 4% slippage ratio in Q4 FY25, prompting higher provisions and a revised credit cost guidance of 2.2–2.25%. CEO V. Vaidyanathan expects this stress to peak in Q4 FY25 and ease from Q1 FY26.
• Margin Pressure: A 9-basis-point decline in NIM to 5.95% reflects challenges in the MFI portfolio, though deposit growth remains strong at 25%.
• High Valuations: At 1.8x FY25E book value, some analysts, like Nuvama, argue the stock is fully valued relative to its RoA of 1.0%.

Investor Outlook

For investors, the IDFC First Bank share price surge offers both opportunities and risks. Technical analysts suggest monitoring support levels at ₹71–72 and resistance near ₹80 for short-term trades. Long-term investors may find the stock attractive due to its growth trajectory, with a projected RoE of 11% by FY26 and a diversified portfolio in retail banking and digital services.

The bank’s recent capital raise and approval for Warburg Pincus to acquire a 9.99% stake enhance its growth potential. However, investors should watch for macroeconomic factors like RBI rate cuts and inflation trends, which could impact net interest margins and credit costs.

A Bright Spot in India’s Banking Sector

IDFC First Bank’s recent rally, backed by Investec’s bullish outlook and strong fundamentals, highlights its potential in India’s dynamic banking sector. With a focus on retail loans, digital banking, and sustainable growth, the bank is well-positioned to capitalize on India’s credit demand, projected to grow at 17% annually.

Investors are advised to track IDFC First Bank share price trends, Q1 FY26 results (to be announced on July 26, 2025), and analyst updates for informed decisions. The stock’s resilience and strategic initiatives make it a compelling watch in 2025.

Stay updated on IDFC First Bank stock news and banking sector trends for smarter investment choices.

Also Read: Axis Bank Share Price Dips Below ₹1,170 Despite ₹28,055 Crore Net Profit in FY25