🧠 At a Glance
Born from a 2018 merger between IDFC Bank and Capital First, IDFC First Bank promised to be the private bank of the future — tech-driven, retail-focused, and oh-so-customer-friendly. Fast forward to 2025, and we’re asking: Is this just a nice app with nice slogans? Or a legit challenger to HDFC, ICICI & Axis? Strap in. The bank has grown. But so has the bleeding. 🩸
🏗️ Origin Story: Two Misfits, One Marriage
- IDFC Bank: Born in 2015 as a demerged infra-financing arm. Basically a PSU with a blazer.
- Capital First: A retail NBFC led by V Vaidyanathan, known for smart underwriting & growth.
- In 2018, they merged. Vaidyanathan took over. Strategy?
🚫 No more corporate loans
✅ Retail-first, tech-first, customer-first
📊 5-Year Financial Snapshot
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS (₹) | Deposits (₹ Cr) | ROE % | ROA % |
|---|---|---|---|---|---|---|
| FY21 | 15,968 | 483 | 0.85 | 88,536 | 3% | 0.3% |
| FY22 | 17,173 | 132 | 0.21 | 105,540 | 1% | 0.1% |
| FY23 | 22,728 | 2,485 | 3.75 | 144,470 | 11% | 1.1% |
| FY24 | 30,325 | 2,942 | 4.16 | 200,570 | 10% | 1.0% |
| FY25 | 36,502 | 1,490 | 2.04 | 252,010 | 4% | 0.5% |
⚠️ Net profit halved in FY25 despite 20% revenue growth
🚀 What Worked for IDFC First?
💸 1. Explosive Retail Loan Growth
- From corporate-heavy to 84% retail loan book
- Focus on home loans, vehicle loans, digital personal loans
- Disbursal engine? Strong. Delinquency? Decent.
📱 2. Tech-Forward Banking
- Their app experience is arguably top 3 in India
- Insta-account openings, FASTag, full-stack digital journeys
- Young urban customers ❤️ it
💰 3. CASA Game Strong
- CASA ratio near 47%
- Better than even some older private banks like Axis
- Low-cost deposits = sticky, valuable base
😬 What Didn’t Work?
🩸 1. Financing Profit is a Trainwreck
| Year | Financing Margin % |
|---|---|
| FY21 | -8% |
| FY22 | -15% |
| FY23 | -3% |
| FY24 | -5% |
| FY25 | -14% 😨 |
Translation: Interest earned < Interest paid + expenses. Constant bleeding. Not normal for a bank.
🧨 2. Other Income Is Saving Their Butt
| Year | Other Income (₹ Cr) | % of PBT |
|---|---|---|
| FY23 | 4,467 | 134% |
| FY24 | 5,932 | 154% |
| FY25 | 6,977 | 374% ⚠️ |
Without this, their P&L would be an obituary.
⚠️ 3. Contingent Liabilities = ₹3 Lakh Cr+
That’s 6x their market cap.
Not necessarily fraud, but means IDFC is legally or financially on the hook if some events go wrong. Red flag? Yellow-orange, at least.
🔻 Quarterly Breakdown (FY25)
| Quarter | Revenue | Net Profit | EPS | Financing Margin % |
|---|---|---|---|---|
| Q1 | ₹8,789 Cr | ₹643 Cr | ₹0.91 | -8% |
| Q2 | ₹8,957 Cr | ₹212 Cr | ₹0.28 | -17% 😬 |
| Q3 | ₹9,343 Cr | ₹340 Cr | ₹0.46 | -15% |
| Q4 | ₹9,413 Cr | ₹296 Cr | ₹0.40 | -16% |
PBT declining every quarter. Margins worsening. Not cute.
🧾 Valuation Metrics
| Metric | Value |
|---|---|
| CMP | ₹70.2 |
| Book Value | ₹51.9 |
| P/B | 1.35x ✅ |
| EPS (TTM) | ₹2.04 |
| P/E | 34.5x ❌ |
| ROE | 4.24% ❌ |
| ROA | ~0.5% ❌ |
Looks like a growth stock. But where’s the growth?
Looks like a PSU bank in disguise — with a better UI.
🏦 Balance Sheet Snapshot
| Year | Deposits (₹ Cr) | Loans (₹ Cr) | Net Worth (₹ Cr) |
|---|---|---|---|
| FY21 | 88,536 | 71,285 | 17,900 |
| FY22 | 105,540 | 90,630 | 21,082 |
| FY23 | 144,470 | 118,171 | 25,847 |
| FY24 | 200,570 | 145,492 | 32,274 |
| FY25 | 252,010 | 172,082 | 38,007 |
Growth? ✅
Profitability? ❌
Loan-Deposit Ratio: 68% → Conservative. Not aggressive.
📊 Fair Value Estimate (EduInvesting Style)
🧮 Method 1: P/BV Approach
- Book Value FY25 = ₹51.9
- P/B Fair Range for a mid-tier bank with 8%–10% ROE = 1.0x to 1.2x
🎯 FV Range = ₹52 – ₹62
📉 Method 2: P/E Based
- EPS = ₹2.04
- With low ROE, assign 15–18x PE (being generous)
🎯 FV Range = ₹31 – ₹37
🧮 EduInvesting Fair Value Range = ₹37 – ₹62
Current Price = ₹70.2 ❌
Stock is 10–90% above fair value depending on optimism levels.
📉 Shareholding Shake-Up
| Category | Mar 2023 | Mar 2025 |
|---|---|---|
| Promoters | 39.99% | 0.00% ❗ (merged into IDFC Ltd) |
| FIIs | 19.31% | 25.68% ✅ |
| DIIs | 7.69% | 19.30% ✅ |
| Govt | 3.98% | 9.16% |
| Public | 29.05% | 45.86% 🔼 |
DII + FII support strong. But no Promoter skin = high governance risk going forward.
🧵 TL;DR – Should You Bank on This?
✅ Retail growth? Impressive
✅ CASA? Amazing
✅ App? Love it
❌ Margins? Disaster
❌ PBT trajectory? Flatlining
❌ Valuation? Too spicy
🧠 EduInvesting Verdict
IDFC First Bank is everything a modern bank should look like — except profitable.
It’s like a Gym Bro with 18-inch biceps… but terrible cholesterol. 🏋️♂️🫀
Until this bank fixes its financing margin disease, this isn’t a compounding machine — it’s a feel-good fintech with a bleeding P&L.
✍️ Written by Prashant | 📅 18 June 2025
Tags: IDFC First Bank, V Vaidyanathan, Retail Loans, Digital Banking, CASA, EduInvesting Fair Value, Private Banks, PSU in Disguise
