Brickwork reaffirms rating of IDFC First Bank Ltd

'Brickwork Ratings' have re-affirmed the existing rating ('BWR AA+/Stable') of IDFC FIRST Bank Limited in respect of its Non-Convertible Debentures (Rs. 1,968.40 crore).

The rating reaffirmation factors in the Bank's comfortable capital adequacy ratio(CAR) of a total 16.74% (CET-1 ratio of 14.88% ) as of 31 March 2022, along with an increase in the business size to Rs.2.23 lakh Crs. (FY21: Rs.1.89 lakh Crs) consisting of net advances of Rs.117858 Crs. (FY21: Rs.100,550 Crs.) and total deposits of Rs.105,634 Crs (FY21: Rs.88,688 Crs) as of 31 March 2022 through increased focus on the retail portfolio. The Bank has a strong board of directors and a dynamic management team under the leadership of Mr V. Vaidyanathan as its Managing Director and Chief Executive Officer.

The rating is, however, constrained by the modest decrease in the gross non-performing assets ratio to 3.7% (FY21: 4.15%) as of 31 March 2022. The increase in GNPA in absolute terms / slippage was Rs.7519 Crs. in FY22 primarily due to the impact of COVID-19 second wave during the early part of FY22, as against Rs.5626 Crs in FY21. However, with the economy gradually coming back during the later half of the year, the Bank's recovery was strong and resulted in the reduction of the GNPA for FY22 which was better, at Rs.7353 Crs. as compared to Rs.3603 Crs. in FY21. The high C:D ratio, of more than 100% is also a constraining factor.

BWR continues to maintain the Bank's rating outlook as stable, as it expects the bank to continue increasing its business mix in favour of a retail portfolio over the next year, especially in better yielding assets, along with an increase in the CASA ratio, continual growth in earnings and operating profits, the maintenance of comfortable capital adequacy ratios and infusion of capital funds to assist business growth and manage incremental delinquency, if any. However, the incremental slippages from the bank's exposure to business loans, especially in the retail sector, shall be monitorable.

Shares of IDFC First Bank Limited was last trading in BSE at Rs. 34.70 as compared to the previous close of Rs. 35.10. The total number of shares traded during the day was 1373948 in over 6280 trades.

The stock hit an intraday high of Rs. 35.15 and intraday low of 34.50. The net turnover during the day was Rs. 47731785.00.

Source : Equity Bulls

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