IDFC First Bank - Superior Incremental Unit Economics Demonstrates Business Potential: ICICI Securities

An IDFC First Bank branch in Nerul. (Source: BloombergQuint).

IDFC First Bank - Superior Incremental Unit Economics Demonstrates Business Potential: ICICI Securities

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

IDFC First Bank Ltd.’s evolution is unique in a sense- on getting license, it was created out of demerger of infrastructure financing business followed by merger of erstwhile Capital First Ltd.

Stress build-up and franchise investment resulted in a weak return profile (net worth erosion) during the transition phase.

However, the new bank, with a new board, new management and renewed focus, has made significant strides in retailisation and granularisation of its business.

Current return profile is dragged by high-cost structure, low fee income and elevated credit cost.

Nonetheless, its marginal unit economics is superior and incremental retail disbursements have potential return on equity of more than 20%.

Click on the attachment to read the full report:

ICICI Securities IDFC FIRST Bank Initiating Coverage.pdf

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