Recommendation from Banking Sector

This section gives a recommendation of a stock having stock price below Rs 150 with sound fundamentals and expected to give handsome returns over a one-year time horizon [EasyDNNnews:PaidContentStart]

IDBI Bank Ltd : A BETTER BANK EMERGES

HERE IS WHY
✓  Lower blow-up risk from granular lending
✓  Deposit base remains well spread out
✓  Strong quarter; NPAs tightly contained

I n banking, the strongest moat is not built with glossy campaigns, it is built in credit meetings, recovery rooms, and the daily habit of saying ‘no’ more often than ‘yes’. That is why IDBI Bank Limited (IDBI) stands out right now: a legacy lender with a national footprint and a recognisable franchise, but more importantly, a bank that has spent the last few years rebuilding its core asset quality discipline, sharper underwriting, and a simpler, steadier operating rhythm. In a market where investors are increasingly rewarding credibility over bravado, IDBI Bank’s turnaround narrative is no longer about ambition. It is about execution and whether this refreshed balance between growth and prudence can translate into durable market relevance.

IDBI is a full-service Indian bank with a pan-India franchise. It operates a hybrid model, a large physical network backed by digital channels covering savings and current accounts, term deposits, retail loans, MSME and corporate lending, trade finance, and treasury services. The distribution engine matters here because it supports steady deposit mobilisation and helps the bank scale granular lending without leaning excessively on bulk funding or a few large-ticket borrowers.

IDBI’s asset-quality story becomes easier to read once you see where the loan book sits. The bank’s ₹2.18 lakh crore funded advances are now clearly retail-led, with Personal Loans at approximately 49.7 per cent of the book, followed by Industries at approximately 25.0 per cent, Services at approximately 15.1 per cent, and Agriculture at approximately 10.3 per cent. This granularity matters: a large retail share typically reduces ‘singleaccount blow-ups’, and that reflects in the stress pattern too. The GNPA ratio of the retail segment is still moderate at roughly 2.6 per cent. The Industries book looks the cleanest on this cut, with GNPA of about 1.8 per cent. Agriculture remains the relatively weaker pocket, with GNPA of about 7.2 per cent, while Services sits in the middle of about 3.1 per cent.

On the liability side, the quality of the franchise shows up in the deposit mix and concentration. As of March 31, 2025, total deposits stood at ₹3,10,294 crore, of which CASA deposits were ₹1.44 lakh crore, translating into a CASA ratio of 46.56 per cent. In simple terms, nearly half the deposit base is coming from current and savings accounts, which typically carry a lower cost and offer better stickiness than bulk money. The concentration data strengthens this comfort: the top 20 depositors form just 12.06 per cent of total deposits, meaning the funding base is largely diversified and less exposed to sudden large-ticket withdrawals.

The latest quarter adds weight to the turnaround. In Q3 FY26, IDBI Bank reported net profit of ₹1,935 crore and operating profit of ₹1,917 crore, while NIM stood at 3.52 per cent and the cost-to-income ratio at 56.61 per cent. The balance sheet continued to expand, with deposits at ₹3,07,858 crore (CASA ₹1,35,632 crore, CASA ratio 44.06 per cent) and net advances at ₹2,38,786 crore. Asset quality remained a key positive, with GNPA at 2.57 per cent, NNPA at 0.18 per cent, and a strong PCR of 99.33 per cent. Capital buffers stayed comfortable, with ROA/ROE at 1.83 per cent and 14.49 per cent, respectively.

From an investment lens, the debate has moved on from survival to scalability. The turnaround is visible in the numbers, stronger profitability, tight credit costs and a well-provided balance sheet. The next leg depends on two things: sustaining deposit traction at a sensible cost and growing advances without loosening underwriting. If IDBI holds this line, earnings momentum can remain durable. Trading at a P/B of 1.8x versus a 3-year median of 1.6x, the stock may not screen as cheap. However, the controlled asset-quality profile and improving return ratios provide comfort, and we recommend BUY.

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