Shares of a banking stock trading below Rs.70 surged after the company received approval to raise Rs.7500 crore through a fundraise from two prominent investors. This move is expected to strengthen the bank’s financial position and support its growth plans, driving positive investor sentiment and boosting stock performance in the market.
Price Movement
During Thursday’s trading session, shares of IDFC First Bank Ltd (NASDAQ:FRBA) jumped to an intraday peak of Rs.63.99 each, reflecting a 1.05 percent increase from the prior closing price of Rs.63.32 per share. Over the past five years, the stock has delivered over 140 percent returns.
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What Happened
The Board of Directors of IDFC FIRST Bank, in its recent meeting, approved a preferential issue of equity capital (CCPS) totaling approximately Rs.4,876 crore to Currant Sea Investments B.V., an affiliate of Warburg Pincus LLC, and about Rs.2,624 crore to Platinum Invictus B 2025 RSC Limited, a subsidiary of the Abu Dhabi Investment Authority (ADIA).
IDFC FIRST Bank has undergone a remarkable transformation over the last six years, evolving from an infrastructure-focused development finance institution (DFI) into a modern, technology-driven, pan-India universal bank. During this period, the bank’s deposits grew 6 times, loans and advances doubled, and the CASA ratio improved significantly from 8.7 percent to 47.7 percent.
The new fundraise will boost the capital adequacy ratio from 16.1 percent to 18.9 percent, with the CET-1 ratio expected to be around 16.5 percent, enhancing the bank’s balance sheet for strong, sustainable growth.
Management Commentary
Mr. V Vaidyanathan, Managing Director & CEO, IDFC FIRST Bank commented on the development, “From day one, we have always built our foundation of the Bank with a long-term vision of building a world class bank in India. We are building a culture of empathy for customers and strive to offer highest levels of customer service.
The Bank has firmly moved into profits and is now at a pivotal stage, where our income growth is expected to consistently exceed OPEX growth, leading to improved operating leverage. We expect many businesses which are in the investment stage to turn profitable with scale.”
Offerings and Developments
The bank offers a comprehensive range of services, including retail banking, MSME, rural banking, corporate banking, wealth management, private banking, Fastag, cash management, NRI, and treasury solutions. As of March 31, 2025 (provisional disclosure), the bank’s customer deposits have grown by 25.2 percent year-on-year, while loans and advances have increased by 20.3 percent year-on-year, driven by its user-friendly digital interface, ethical approach, and robust brand presence.
Financial Performance
According to its recent financial updates, IDFC FIRST Bank reported net interest income of Rs.9,343 crores in Q3 FY25, marking a 19 percent increase from Rs.7,880 crores in Q3 FY24. However, the company saw a 52 percent decline in net profit to Rs.340 crores, from Rs.732 crores in the same period last year.
Important Accounting Ratios
The company has a Return on Capital Employed (ROCE) of 4.31 percent and a Return on Equity (ROE) of 5.09 percent. Its Price-to-Earnings (P/E) ratio stands at 24.06, higher than the industry average of 17.17. Furthermore, the company maintains a CASA ratio of 47.2, and an EPS (Earnings Per Share) of Rs. 2.63.
Written by – Siddesh S Raskar
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