After plunging 17% in the previous session, IDFC First Bank’s shares were trading flat today.
The bank’s announcement of a Rs 590-crore scam by its staff and others in Haryana government accounts with the private sector lender caused severe selling pressure on the banking shares.
Early trading today saw IDFC First Bank shares remain steady at Rs 69.55, down from the previous close of Rs 70.04. The bank’s market capitalization was Rs 59,695 crore.
According to a research by Motilal Oswal, the scam only affected one bank in Chandigarh and was not a systematic failing. There is prima facie evidence of employee collaboration with outside parties, but it does not apply to other clients or branches. With a price target of Rs 80, a 14% increase from the previous close, the brokerage kept its call on the stock neutral.
“Based on the findings and after the proper procedures, the bank will look to make required provisions in the coming quarter,” the brokerage said, estimating damages to the financials from the Rs 590 crore scam. Assuming minimal recovery, we estimate that the provisioning requirement will have a 56% impact on 4QFY26 profit before tax (PBT) in the worst-case scenario.
As the authorities examine into the situation, MOSL continued, “We look forward to getting more information on these developments and a potential recovery that may possibly materialize.”
Brokerage Investec reduced its price objective from Rs 105 to Rs 92, a 12.38% decrease, following the revelation of a Rs 590-crore fraud case by the private sector lender. However, the lender’s updated price objective was over 30% more than the going rate.
Investec stated that the ultimate impact of the fraud depends on the results of the investigation, recoveries, and other operational enhancements while taking a cautious but constructive position.
The bank must improve its operational procedures and stop the problem from affecting other customers, the brokerage stated.
With previous predictions of 29% core Pre-provision operating profit (PPoP) growth (FI25-FI28), the brokerage continues to have a favorable outlook on the bank’s growth prospects notwithstanding the short-term effect of Rs 590 crore.
