IDFC First Bank: 2QFY27: In-line core trends, RoA expansion continues on positive operating leverage; remain OW

IDFCFB reported broadly in-line 2QFY27 operating performance: NII rose 21% y/y to Rs 61.8bn (+3.5% q/q, in line), PPOP rose 35% y/y to Rs 25.4bn (-0.6% q/q, -2% vs JPMe), and PAT rose 196.5% y/y to Rs 10.4bn (-2.8% q/q, -4.4% vs JPMe on higher tax). NIM declined 32bps q/q to 5.58% (reported, ex-IT refund), in line with expectations and mainly driven by FCNR(B); management expects NIM to normalize to ~5.8% by 4QFY27 as surplus liquidity is deployed and repo rate hikes flow through. Non-II rose 21.4% y/y with healthy fee income offsetting muted trading income; opex rose 16% y/y, and C/I declined 310bps y/y to 70.1% as positive operating leverage continued, with opex growth lagging income growth by 500bps y/y. GNPA/NNPA improved to 1.32%/0.40% and credit cost on assets fell 55bps y/y to 102bps;