IDFC First Bank target, earnings estimates slashed after ₹590 cr fraud

Emkay Global has cut its FY26, FY27 and FY28 earnings estimates by 30 per cent, 13 per cent and 9 per cent, respectively

IDFC First Bank Ltd. saw its target price and earnings estimates cut by brokerages after the lender reported a ₹590 crore fraud at one of its branches in Chandigarh. 

 

IDFC First Bank disclosed a fraud of ₹590 crore involving government deposits at one of its branches in Chandigarh. The discrepancies came to notice after one of the state government departments sought to close its bank account with IDFC First Bank and transfer the funds to another bank. However, the amount mentioned by the department did not match the balance in the account.

 

The aggregate amount under reconciliation across the identified accounts is approximately ₹590 crore. This is more than the ₹503 crore net profit it reported for the October-December quarter of 2025-26 (Q3-FY26).

 

Analysts cut IDFC First Bank estimates

Emkay Global has trimmed its earnings estimates and target price for IDFC First Bank following the recent operational lapse, citing potential near-term pressure on deposits and margins.

 

The brokerage said that while the incident appears to be an isolated operational issue and not a structural governance concern like that seen at IndusInd Bank, it could still trigger incremental outflows from the Haryana government, which accounts for around 0.5 per cent of overall deposits, or about ₹1,450 crore. It also flagged the risk of partial withdrawals from other government accounts, with total government exposure estimated at 8-10 per cent of deposits.

 

Emkay expects this to weigh on near-term current account savings account growth and delay margin recovery. The brokerage has cut its FY26, FY27 and FY28 earnings estimates by 30 per cent, 13 per cent and 9 per cent, respectively. The revisions factor in fraud-related provisions in FY26 and second-order business and margin impact over the following two years.

 

Emkay Global said the lapse may delay the bank’s near-term re-rating story, but is unlikely to derail its long-term growth and return on assets recovery trajectory. After the sharp market reaction, it has retained its ‘Add’ rating on the stock but lowered the target price by around 16 per cent to Rs 80 from Rs 95 earlier. 

 

Motilal Oswal said that in a worst-case scenario, assuming negligible recovery, the provisioning requirement could impact the fourth-quarter FY26 profit before tax by 56 per cent.

 

The brokerage added that it awaits greater clarity on the developments and any potential recovery that may arise as authorities continue to investigate the matter. It said the estimates will be reviewed during the fourth-quarter preview. In the interim, Motilal Oswal has maintained its ‘Neutral’ rating on the stock, with a revised target price of ₹80.

IDFC First Bank share price history

IDFC First Bank stock rose as much as 1.3 per cent during the day to ₹70.8 per share, a day after it crashed 20 per cent. This compares with a 0.51 per cent decline in the Nifty 50 as of 09:18 AM. The counter has fallen 18 per cent this year, compared to a 2 per cent decline in the benchmark Nifty 50. IDFC First Bank's total market capitalisation fell to ₹60,151.35 crore. 

 

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