IDFC First Bank Re-Rating Delayed Amid Fraud Concerns

IDFC First Bank Downgraded by BoFA Securities; Price Target Cut to ₹75 After ₹590 Crore Fraud Disclosure​

Shares of IDFC First Bank Ltd. are set to remain in focus on Thursday, February 26, after brokerage firm BoFA Securities downgraded the stock and reduced its price target following recent developments at the lender.

BoFA Downgrades Rating to Neutral, Slashes Target Price​

BoFA Securities has downgraded IDFC First Bank to “neutral” from its earlier “outperform” rating. The brokerage also cut its price target to ₹75 from ₹95 previously. The revised target stands only marginally above the stock’s Wednesday closing price.

In its latest note, BoFA said that a re-rating of the stock will be delayed until there is complete clarity on the recent issues. Reflecting this cautious stance, the brokerage has reduced its financial year 2027 Earnings Per Share estimates by 13 percent.

₹590 Crore Fraud Triggers Sharp Stock Reaction​

The downgrade comes after IDFC First Bank disclosed a ₹590 crore fraud, described as a reconciliation discrepancy in an account related to the Haryana Government. Following the disclosure, the bank’s shares declined as much as 20 percent on Monday.

Subsequently, the bank was debased by the government, along with AU Small Finance Bank.

While IDFC First Bank clarified that the issue was an isolated incident confined to a single branch, and maintained that its internal checks and balances remain intact with business performance staying strong, the stock has not witnessed a meaningful recovery since the sharp fall.

Potential Impact on CASA, Deposit Growth and Costs​

BoFA’s note highlighted that the incident could disrupt the bank’s CASA franchise. According to the brokerage, this may impact deposit growth, cost of funds and loan growth in the near term.

In addition, BoFA expects higher operating expenditure for the lender, which could weigh on profitability over the coming quarters.

Analyst Coverage Reflects Mixed Sentiment​

IDFC First Bank currently has coverage from 30 analysts. Of these, 16 have assigned a “buy” rating, eight recommend “hold,” and six maintain a “sell” rating.

Following the incident, brokerages including Keynote Capitals, ICICI Securities, and Anand Rathi have also downgraded the stock.

Shares of IDFC First Bank ended 1.1 percent lower on Wednesday at ₹70.16, underscoring continued caution among investors after the fraud disclosure and subsequent brokerage actions.