IDFC First Bank Downgraded by BoFA, Re-rating Delayed Amid Fraud Concerns

• BoFA Securities downgraded IDFC First Bank to "neutral" from "outperform" and cut its price target to ₹75 from ₹95.
• The re-rating of IDFC First Bank is expected to be delayed until full clarity emerges on recent issues, leading to a 13% cut in FY27 EPS estimates.
• Shares declined 20% after a ₹590 crore fraud disclosure related to a Haryana Government account, later debunked by the government.
• Despite the bank's clarification that it was an isolated incident, the stock failed to recover meaningfully.
• BoFA anticipates disruption in CASA, impacting deposit growth, cost of funds, loan growth, and higher operating expenditure.