Why IDFC First Bank Stock is Falling? | Yadnya Investment Acdemy

In the recent market correction, where Bank Nifty is down by nearly 8%-10%, on the other hand, this particular stock corrected by around 10%-15%. IDFC First Bank has posted decent figures for Q4FY21. So, what are the possible reasons behind this continuous fall in this stock price? Let’s discuss the reasons in brief.

Introduction:

IDFC First Bank has announced its Business figures for Q4FY21 ahead of its quarterly results. Banks had posted some decent numbers this quarter. But the stock price of the bank has witnessed a fall of around 10%-15% against the fall in Bank Nifty of 8%.

Financial Highlights of Q4FY21:

i) Total Funded Assets/Total Loan Book:

• Sequential growth in the Total Loan Book has been recorded. Currently, the Loan Book of IDFC First Bank is Rs. 1.17 Lakh Cr.
• Bank has reported sequential growth of 6.6% and yearly growth of around 10% in the Loan Book in this quarter.

ii) Total Customer Deposit:

• The figures of total customer deposits are quite relieving for the bank.
• In Q4FY20, the total deposits were 57,719 Cr., which has now reached 82,628 Cr.
• The above figure accounts for 43.15% YoY growth and Quarter on Quarter growth of 6.91%.

iii) CASA Deposit:

• CASA Deposit of the bank has grown by 122.74% on yearly basis. It was 20,661 Cr. in the same quarter of last year, now it has increased to 46,022 Cr.
• CASA deposit has grown by 13.46% in absolute terms.

iv) CASA Ratio:

• IDFC First Bank has crossed the mark of 50% in CASA ratio for the very first time.
• CASA Ratio in Total Deposit of the bank stands at 51.95% in Q4FY21, which was 31.87% in Q4FY20. Improvement of 20.08% can be reported.
• CASA ratios have improved sequentially as well. It was 48.31% in Q3FY21.
• The average CASA ratio of the bank is also 50% for the last quarter.

v) Top-20 Depositors Contribution:

• In last year, 20.26% Of the total deposit of the bank was contributed by Top-20 Depositors.
• Now, this contribution by these top depositors has gone down to 7.76%.
• This shows that Bank is trying to diversify by reducing its dependencies on Top Depositors.

vi) Average Liquidity Coverage Ratio:

• Average Liquidity Coverage Ration simply refers to the ability of the banks to meet term short requirements.
• Ideally, this ratio should be above 100%.
• As of now, Bank is having an Average Liquidity Coverage Ratio of 155% in Q4FY21.
• This ratio stood at 132% in the last quarter while it was 111% in Q4FY20.

vii) Qualified Institutional Placement (QIP):

• IDFC Bank has also raised a QIP of around Rs. 3,000 Cr. this month.
• Bank has raised QIP for Rs. 57 per piece.

Major Concerns for the Bank:

Legacy Loan:

• The major concern of the market for this bank is the Loan which has come from the balance sheet of IDFC Bank.
• Even now, 33% of its book accounts for a wholesale loan.
• The bank is trying hard to move towards the retail side.

Conclusion:

IDFC First Bank is tick marking all the checkboxes as a retail-oriented bank. The company has posted very impressive figures for Q4FY21. Currently, Bank is facing a downward trend in its stock price due to the concern of the market for its legacy loans.