Shares of IDFC First Bank rose 3.6% in intraday trade to hit their fresh 52-week high of ₹55.15 on BSE on October 6. The stock finally closed 1.88% higher at ₹54.25.
The journey of IDFC First Bank over the last three months has been stellar. The stock hit its 52-week low of ₹28.95 on June 22, 2022, and has leapt 87% since then (as of October 6 close).
Due to its healthy fundamentals, the private sector lender stock is enjoying a bullish run. On October 3, it released its business updates for the September quarter of the current financial year (Q2FY23) which showed healthy improvement in key parameters.
As per the bank's BSE filing, its assets grew 24.8% year-on-year (YoY) and 5.6% quarter-on-quarter (QoQ) to ₹1,45,322 crore. CASA deposits grew 37% YoY and 11.7% QoQ. CASA ratio stood at 51.34% as of September 30, 2022, against 50.04% as of June 30, 2022.
The bank's retail business is witnessing healthy growth. The bank said its retail business (home loans, loans against property, vehicle financing, credit cards, and other personal credit) represents 66.4% (against 65.8% in Q1FY23) of the overall funded assets as of September 30, 2022.
The Q2FY23 business updates have cheered analysts and investors as some believe healthy loan growth will boost margin.
"The bank is progressing well in its endeavour to become a retail lender and is showing strong traction in growing its Retail franchise in terms of loans and deposits. Improvement in the CASA ratio is encouraging and healthy loan growth, especially retail, is likely to aid margin," said brokerage firm Motilal Oswal Financial Services.
Apart from fundamentals, technical factors are also supporting the stock. On the technical front, the stock is in an uptrend with a strong positive bias.
As per Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher, the stock recently, with a small correction, bottomed out near the significant 50EMA (exponential moving average) level of ₹46 and reversed the trend to continue further with the positive move.
"A further move past the previous peak of ₹53.75 would further strengthen the bias and can anticipate new targets of ₹62-69 levels. The RSI indicator is also well placed and has indicated strength to continue the momentum in the coming days. One can keep the stop loss at ₹46 below which the trend would turn weak," said Parekh.
Rahul Goud, Research Analyst - Equity Research, CapitalVia Global Research pointed out that at ₹55, the stock has a maximum call seller position of 16,65,000 contracts, and the trading on October 6 saw a short covering of 2,37,000 contracts.
“Once the stock crosses ₹55, an additional short-covering may occur. In the previous trading session, the average trading volume exceeded the average for the previous 20 days. 43.5 million shares (or 34%) of the 126 million traded shares were delivered, showing market participants' confidence in the stock,” said Goud.
“Technically, the MACD indicator is indicating a bullish crossover on the daily charts while the stock has formed an inverse head and shoulder pattern. Traders can buy the stock at roughly ₹54 with a ₹46 stop loss and a ₹69 short-term target,” said Goud.
According to a MintGenie poll, an average of 11 analysts have a ‘buy’ call on the stock.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.