IDFC First Bank gains 9%, hits 52-week high as board approves fund raising

The lender said there are significant opportunities for growth based on the strong capabilities it has built as well as the strong outlook for economic recovery in India

Shares of IDFC First Bank hit a fresh 52-week high of Rs 63.05, up 9 per cent in the intra-day trade, on the BSE on Friday after the bank's board approved raising up to Rs 3,000 crore.

"The Board at its meeting held on Thursday, February 18, noted the significant opportunities for growth of the Bank based on the strong capabilities the Bank has built and the strong outlook for economic recovery in India, and has approved raising of funds for an amount aggregating up to Rs 3,000 crore, in one or more tranches," it said in an exchange filing.

Fund raising has been approved by way of issuance of securities, through one or more permissible mode(s), including but not limited to a private placement, qualified institutions placement, follow-on public offering or a combination thereof, subject to shareholders’ approval, IDFC First Bank said in a regulatory filing. READ HERE

As per a back-of-the-hand calculation by ICICI Securities, this capital raising will lead to equity dilution of 7-8 per cent while book value should increase by around 7 per cent.

In the past three months, the stock of IDFC First Bank has rallied 85 per cent, as compared to a 17 per cent rise in the S&P BSE Sensex.

In October-December quarter (Q3FY21), the bank's overall funded assets increased 0.7 per cent year on year (YoY) to Rs 1.10 trillion, while retail assets grew 24 per cent YoY (11 per cent quarter on quarter(QoQ)) to Rs 66,635 crore. Retail Funded Assets, including the PSL Buyouts, thus constitute 64 per cent of overall Funded Assets. Motilal Oswal Financial Services believes the strong traction in retail loans was aided by festive demand and an improved economic outlook.

The brokerage firm,in Q3FY21 results update, said it believes that IDFC First Bank is progressing well in its endeavor to become a retail lender and showing strong traction in growing its retail franchise in terms of both loans and deposits.