Analysis: IDBI Bank Limited

NSE:IDBI Banks - PSU Market cap: ₹99.0K cr

Growth thesis

IDBI Bank is a PSU bank in India offering retail and corporate banking services, with a retail-to-corporate loan mix of 63:37. Post-PCA exit, it targets 10-12% annual loan growth while maintaining NIM ≥3.25% through cost discipline and bulk-deposit expansion (targeting 8-10% composition). Asset quality has improved sharply, with net NPA below 1.25% and PCR at 97.8%, supported by ₹4,000 Cr+ annual recovery from NCLT cases like Videocon (fully provisioned). Over 2-3 years, margin expansion (NIM 4.37%), disciplined credit cost (<1%), and capital adequacy (~19.5%) position it for sustainable ROA (>1%) and ROE (>14%). The key execution risk is delayed recovery from large NCLT cases, which could slow profit upside despite strong internal capital generation.

Why is IDBI Bank Limited stock rising?

  • aim to maintain NIM at healthy levels through corresponding improvement in advance yields despite rising deposit costs
  • targeting to increase bulk deposit composition from 5.5% to 8-10% or slightly beyond
  • pursue differentiated granular approach for retail growth and calibrated expansion in corporate segment, especially with mid-corporates
  • expect credit cost to remain at about 1% or lower for the current fiscal year
  • expect gross NPA to fall below 15% by March 2023, aided by transfer of identified assets to NARCL

Research report

companyname: IDBI Bank Limited ticker: IDBI sector: Banking - universal commercial banking (retail, corporate, MSME, agri and treasury) IDBI Bank is a full-service commercial bank headquartered at IDBI Tower, WTC Complex, Cuffe Parade, Mumbai. It takes deposits, lends to households and businesses, runs a treasury that trades government securities and foreign exchange, and provides transaction banking through a network of 2,243 physical banking outlets (2,174 branches plus 69 fixed Business Corr...

Read the full report →

Catalysts

margin expansion, market share gain

Growth guidance

Advances Growth: 10-12% for FY23; NIM guidance: maintain ≥3.25%

Management consistency

consistent

RS rating: 37 Stage: Stage 2

Get valuation models, detailed research reports, thematic primers, one-pagers, risk analysis, growth triggers, bear case, capex tracker, walk the talk, and more for IDBI Bank Limited and 4,900+ companies.

Sign in
5-day free pass. No card required.
More in Banks - PSU