IDFC First Bank Share Price Target: BofA turns cautious, slashes target by 21% after Rs 590-crore fraud

IDFC First Bank Share Price Target: Shares of IDFC First Bank have been in the spotlight recently following the discovery of a Rs 590 crore fraud allegedly involving certain employees and external parties, linked to accounts held by the Haryana government.

In response to the incident, the bank has reimbursed 100 per cent of the principal and interest amount to the concerned departments of the Haryana government, totalling approximately Rs 583 crore.

Amid these developments, Bank of America (BofA) has reassessed its outlook on the stock. The brokerage has downgraded IDFC First Bank from a “Buy” rating to “Neutral” and has also lowered its target price, citing the recent developments and their potential impact on investor sentiment.

Here's what brokergae has to say:

The brokerage believes the recent fraud incident poses a near-term risk to CASA growth due to potential deposit outflows. Any sustained pressure on CASA could lead to a higher cost of funds and have a marginal impact on loan growth.

BofA also expects operating expenses to rise, driven by increased spending on risk management and compliance measures.

Factoring in these headwinds, the brokerage has trimmed its loan growth estimates for FY27–FY28 by 1–2 per cent and reduced deposit growth projections by up to 3 per cent. It cautions that elevated funding costs resulting from CASA disruptions could weigh on net interest margins (NIMs). Consequently, BofA has cut its EPS estimates by 13–14 per cent for FY26 and FY27.

Despite the near-term challenges and multiple headwinds, BofA remains constructive on the bank’s medium-term prospects, citing its healthy growth outlook and return on assets (RoA) expansion trajectory. However, it notes that clarity on the full financial impact of the incident could delay any potential re-rating of the stock.

Over the past week, the stock has declined nearly 14 per cent, while losses over the last two weeks stand at around 13 per cent. On a year-to-date basis, the stock has fallen more than 16 per cent since January 1, reflecting continued weakness amid recent developments and investor caution.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)