They grew fast. They raised billions. They made profits. But still nobody’s excited. Why?
📌 At a glance:
Between FY21 and FY25, IDFC First Bank grew profits by over 8x, increased deposits by 3x, and finally entered the ₹1,000 Cr+ profit club. And yet — with just 4% RoE, a P/E of 35, and no dividend — investors are asking: “What’s the endgame?” This is not just a 5-year recap — it’s a story of high hopes, hybrid DNA, and hard truths.
🏦 About IDFC First Bank
- Formed on December 18, 2018 after the merger of IDFC Bank and Capital First
- Aims to build a retail-focused, tech-driven, inclusive bank
- Led by V Vaidyanathan, ex-Capital First CEO
- Focuses on retail loans, MSME finance, CASA growth, digital banking, credit cards, FASTag, etc.
- Has positioned itself as the next “HDFC Bank Lite” — with startup-style growth and PSU-style dilution
👨💼 Key Managerial Personnel (KMP)
| Role | Name |
|---|---|
| MD & CEO | V. Vaidyanathan |
| CFO | Bimal Giri |
| Chairman | Rajiv Lall |
| Chief Operating Officer | Ajay Kumar |
📊 5-Year Financial Recap (FY21–FY25)
| Year | Revenue (₹ Cr) | Net Profit (₹ Cr) | EPS (₹) | NIM (%) | ROE (%) | Net Worth (₹ Cr) |
|---|---|---|---|---|---|---|
| FY21 | 15,968 | 483 | 0.85 | ~4.5 | 3 | 12,224 |
| FY22 | 17,173 | 132 | 0.21 | ~5.0 | 1 | 14,864 |
| FY23 | 22,728 | 2,485 | 3.75 | ~5.3 | 11 | 19,229 |
| FY24 | 30,325 | 2,942 | 4.16 | ~5.6 | 10 | 25,204 |
| FY25 | 36,502 | 1,490 | 2.04 | ~5.4 | 4 | 30,685 |
🪜 From Losses to Profits: What Changed?
- Pre-FY21: Heavy provisioning, legacy IDFC infra baggage
- Post-2021: Cleaned up book, focus on retail, strong digital play
- Retail Loan Book CAGR > 25%
- Cost of funds fell due to CASA ratio improvements
- But FY25 profit dropped 49% YoY — thanks to high opex, provisions, and margin pressure
📈 Revenue vs Profit Disconnect
| Metric | FY21 | FY25 | CAGR (5Y) |
|---|---|---|---|
| Revenue | ₹15,968 Cr | ₹36,502 Cr | ~18% |
| Net Profit | ₹483 Cr | ₹1,490 Cr | ~28% |
| EPS | ₹0.85 | ₹2.04 | – |
| P/E (FY25) | – | 35.2 | 🚩 |
Despite profit growth, stock still trades at a valuation more generous than its ROE deserves.
🧾 Deposits & Borrowings Explosion
| Metric | FY21 | FY25 | Growth |
|---|---|---|---|
| Deposits | ₹88,536 Cr | ₹2,52,010 Cr | 3x |
| Borrowings | ₹45,786 Cr | ₹38,984 Cr | 🔻 |
| Loan Book | ~₹1,00,000 Cr → ₹2,50,000 Cr (est.) | 📈 Massive retail shift |
CASA ratio improved, but still lags giants like HDFC Bank or ICICI Bank.
🧮 Other Highlights
- Contingent Liabilities: ₹3,05,986 Cr 😨
- Other Income FY25: ₹6,977 Cr — 19% of total revenue
- Gross/Net NPAs: Lower than 2% (impressive by PSU standards)
- Credit Cards & FASTag: New growth drivers
- Fundraising: ₹7,500 Cr approved in FY25 to beef up capital
⚡ FY25 Was a Buzzkill
- PAT dropped from ₹2,942 Cr to ₹1,490 Cr
- Opex ballooned, provisions increased
- Market punished the stock: down 17% in a year
- EPS halved. And dividend? Still 0%.
🚩 Investors who held on for 5 years — still waiting for that “private bank re-rating”.
📉 Share Price Performance
| Period | CAGR | Comments |
|---|---|---|
| 5Y | 23% | Mostly post-2020 rally |
| 3Y | 28% | Strong retail optimism |
| 1Y | -8% | Reality check in FY25 results |
CMP ₹71.6 | Book Value ₹51.9 | P/B = 1.38x
Not expensive. But also not clearly cheap. It’s like paying Domino’s price for Aadhar card service.
🔮 Fair Value Estimate (EduInvesting Range)
Assumptions:
- NIM ~5.4% stays intact
- Retail loan book grows at 20% CAGR
- ROE improves to 9–10% over 3 years
- P/B target = 1.8–2x (best case)
🎯 EduInvesting FV Range: ₹78 – ₹88
Low double-digit upside if FY26 delivers clarity. High downside if fundraising dilutes equity further.
🧠 EduInvesting Take:
This isn’t a fraud. It’s not a trap.
But it is a long wait.
- ✅ Retail franchise is real
- ✅ Strong CEO with execution chops
- ✅ NIMs, GNPA, deposit growth all look fine
- ❌ No dividend = no compounding joy
- ❌ P/E of 35 = no margin of safety
- ❌ ROE of 4% = “why even list?”
“IDFC First Bank is like a startup in a banker’s uniform — exciting on paper, exhausting in practice.”
🚩 Risks & Red Flags
- 😰 Contingent liabilities remain sky-high
- 😓 Fundraising = dilution overhang
- 😑 Still no dividend
- 😬 Retail growth plateauing in FY25
- 🤡 Valuation doesn’t justify RoE
🔍 What to Watch in FY26
- Will fresh capital raise finally boost Tier 1?
- Will Vaidyanathan rework cost structure?
- Will IDFC First enter SME + wealth + rural banking meaningfully?
- Or… will it stay stuck in valuation purgatory?
🏷️ Tags:
IDFC First Bank 5-Year Recap, IDFC First FY25 Results, Retail Bank India, V Vaidyanathan, Private Bank Valuation India, EduInvesting Banking Review, No Dividend Stocks India, IDFC First vs HDFC Bank
✍️ Written by Prashant Marathe
📅 8 June 2025
