IDBI Bank Displays Bullish Breakout- Good buy in 2023

IDBI Bank is a full-service universal bank that serves customers from all segments. It has a rich legacy, dating back to 1964, when it was founded as an apex Development Financial Institution (DFI). As a DFI, IDBI Bank played a key role in the development of the Indian economy, providing financing to industries and helping to promote balanced regional growth.

In 2004, IDBI Bank was converted into a banking company, and it has since expanded its range of products and services to meet the needs of a wider range of customers. The bank has a strong presence in the capital markets, investment banking, and mutual fund businesses. It is also committed to providing excellent customer service, through its network of branches and ATMs, as well as its digital offerings.

IDBI Bank is strongly committed to working towards becoming the “most preferred and trusted bank enhancing value for all stakeholders.” The bank is well-positioned to achieve this goal, given its strong track record and its commitment to providing innovative and customer-centric financial solutions.

IDBI Bank Market Cap (NSE: IDBI) 

IDBI Bank Valuations 

• Profit: IDBI Bank’s profit for the quarter ended March 2023 was ₹1,133 crores, up 64% from the same quarter in the previous year.
• Net interest income (NII): Net interest income (NII) was ₹3,280 crores, up 35% from the same quarter in the previous year.
• NPAs: NPAs as a percentage of gross advances stood at 13.82% as of March 2023, up from 12.9% as of December 2022.
• Capital adequacy ratio (CAR): Capital adequacy ratio (CAR) stood at 16.2% as of March 2023, above the regulatory requirement of 11.5%.
• Loan book: IDBI Bank’s loan book grew by 11.5% in FY2022-23, to ₹2.3 trillion.
• Retail lending: Retail lending grew by 18.5% in FY2022-23, to ₹1.1 trillion.
• Capital raising: IDBI Bank raised ₹15,000 crores in capital in FY2022-23, through a combination of equity and debt.
• Digital transformation: IDBI Bank is investing heavily in digital transformation, and has launched a number of new digital products and services.
• Risk management: IDBI Bank has strengthened its risk management framework, and is working to reduce its NPAs.

IDBI Bank Directors report

• Strong foundation: IDBI Bank has a long history of providing financial support to Indian businesses. The bank has a deep understanding of the Indian economy and a strong network of relationships with Indian businesses.
• Sound business model: IDBI Bank’s business model is focused on providing financial support to Indian businesses. The bank offers a wide range of products and services, including loans, investments, and advisory services. IDBI Bank has a strong track record of success in this area.
• Experienced management team: IDBI Bank is led by a team of experienced and capable executives. The bank’s CEO, Rakesh Sharma, has over 30 years of experience in the banking industry. He has a proven track record of success and is well-respected by the banking community.
• Strong financial performance: IDBI Bank has a strong financial performance, with improving asset quality and a well-diversified loan portfolio. The bank’s net profit increased by 50% in FY2022-23, and its capital adequacy ratio is well above the regulatory requirement.
• Commitment to meeting the challenges of the future: IDBI Bank is aware of the challenges that it faces, such as the ongoing economic slowdown in India, the debt problems in the corporate sector, and the headwinds facing the global economy. However, the bank is committed to meeting these challenges and achieving its long-term goals. The bank has a plan to address these challenges, and it is confident that it will be successful.

IDBI Bank’s Management discussion

• The bank’s asset quality also improved, with the net non-performing assets (NPA) ratio declining to 1.27%. This was due to the bank’s proactive efforts to recover bad loans and its focus on lending to high-quality borrowers.
• The bank’s capital adequacy ratio stood at a healthy 15.3%, well above the regulatory requirement of 13%. This provides the bank with a strong financial cushion to weather any economic shocks.
• The bank is focused on digital transformation and has made significant progress in this area in recent years. The bank has launched a number of digital initiatives, including a mobile banking app, an internet banking portal, and a customer relationship management system. These initiatives have helped the bank to improve its customer service and to reduce its operating costs.
• The bank is committed to sustainable banking and has set a target of reducing its carbon footprint by 30% by 2030. The bank is taking a number of steps to achieve this target, including investing in renewable energy, improving the energy efficiency of its operations, and promoting sustainable lending practices.
• The bank’s focus on retail lending is paying off. Retail loans grew by 12% in FY2022-23, and they now account for 56% of the bank’s total loan portfolio. This is a good sign for the bank’s future, as retail loans are generally less risky than corporate loans.
• The bank’s growing international business is another positive sign. The bank’s international business grew by 24% in FY2022-23, and it now accounts for 10% of the bank’s total loan portfolio. This is a good sign for the bank’s future, as it is expanding its reach to new markets.
• The bank’s strong treasury operations helped it to generate healthy profits in FY2022-23. The bank’s treasury profits grew by 26% in the year, and they now account for 18% of the bank’s total net profit. This is a good sign for the bank’s future, as it shows that the bank is able to generate profits even when the overall economy is weak.

IDBI Bank Controversies

• The Techpro Infra fraud: In 2018, IDBI Bank was defrauded of Rs. 1,900 crore by Techpro Infra, a construction company. The fraud was discovered after Techpro Infra defaulted on its loan repayments. The bank filed a case against Techpro Infra and its promoters, and the case is still ongoing.
• The Nirav Modi fraud: In 2018, IDBI Bank was one of the banks that was defrauded by Nirav Modi, a diamond merchant. Modi and his associates used fraudulent Letters of Undertaking (LoUs) to obtain loans from IDBI Bank and other banks. The fraud resulted in a loss of Rs. 14,000 crore to IDBI Bank and other banks.
• The ABG Shipyard fraud: In 2020, IDBI Bank was one of the banks that was defrauded by ABG Shipyard, a shipbuilding company. ABG Shipyard and its promoters used fraudulent invoices to obtain loans from IDBI Bank and other banks. The fraud resulted in a loss of Rs. 22,842 crore to IDBI Bank and other banks.
• The Yes Bank crisis: In 2020, IDBI Bank was one of the banks that was called upon to bail out Yes Bank, a private sector bank. Yes Bank was facing a liquidity crisis due to fraudulent lending practices by its former management. IDBI Bank invested Rs. 7,250 crore in Yes Bank to help it meet its short-term obligations.
• Government ownership: IDBI Bank is majority-owned by the Government of India. This government ownership could lead to political interference in the bank’s operations, which is a risk factor for investors.

IDBI Bank News

• IDBI Bank collaborates with Tech Mahindra for AI-powered virtual assistant: IDBI Bank has collaborated with Tech Mahindra to launch an AI-powered virtual assistant called IDBI Genie. The assistant can answer customer queries, provide account information, and initiate transactions.
• IDBI Bank launches new co-branded credit card with Amazon.in: IDBI Bank has launched a new co-branded credit card with Amazon.in. The card offers customers cashback on Amazon.in purchases, as well as other benefits.
• IDBI Bank partners with IIT Madras for fintech research: IDBI Bank has partnered with the Indian Institute of Technology Madras (IIT Madras) for fintech research. The partnership will focus on developing new fintech products and services for IDBI Bank and its customers.
• IDBI Bank launches new MSME loan product: IDBI Bank has launched a new MSME loan product called IDBI Mudra Loan. The product offers loans to micro, small, and medium enterprises (MSMEs) at competitive interest rates.
• IDBI Bank signs MoU with CII for sustainability initiatives: IDBI Bank has signed a memorandum of understanding (MoU) with the Confederation of Indian Industry (CII) for sustainability initiatives. The MoU will focus on promoting sustainable banking practices and financing sustainable projects.

IDBI bank Share price Analysis

IDBI Bank has exhibited a positive technical breakout on the weekly charts. The stock broke out of a long-standing major resistance zone, which had been constraining its movement for the past four years. This breakout was accompanied by an impressive surge in trading volumes, suggesting a positive sentiment building up around the stock.

The stock is currently consolidating within an ascending triangle pattern, which is a reliable trend continuation formation. This indicates that there are higher chances of a positive breakout from the current consolidation phase. Investors and traders are eagerly anticipating a potential upward movement in the stock’s price as it continues its upward trajectory.

During the consolidation phase, IDBI Bank’s prices displayed a noteworthy bullish candlestick pattern, accompanied by higher trading volumes. Additionally, during price corrections, volumes remained lower, indicating that market participants are actively accumulating the stock at lower levels, indicating a strong belief in its future potential.

The Relative Strength Index (RSI), a crucial momentum indicator, is currently moving in a positive trend and trading above the 70 level. This suggests that buyers are firmly in control in the current scenario, highlighting the increased likelihood of continued upward momentum in the near future.

Looking ahead, IDBI Bank faces an immediate resistance level in the range of Rs. 62-65. A successful breach and sustained trading above Rs. 68 could act as a significant trigger, propelling the stock into a substantial rally. In such a scenario, the stock has the potential to reach the price target range of Rs. 90-94, creating a promising outlook for investors and traders.

The technical indicators are aligning favorably for IDBI Bank, signaling a positive story building around the stock. The decisive breakout from the major resistance level, the ascending triangle consolidation pattern, and the supportive RSI trend all point towards a potentially fruitful journey ahead. Traders and investors are eagerly anticipating a potential rally towards the higher price targets, making IDBI Bank an exciting prospect for those looking to capitalize on emerging opportunities in the stock market.

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Conclusion

IDBI Bank is a well-established Indian bank with a long history of providing financial support to Indian businesses. The bank has a strong financial performance, with improving asset quality and a well-diversified loan portfolio. The bank is also focused on digital transformation and sustainable banking.

However, IDBI Bank has also been involved in a number of controversies, including the Techpro Infra fraud, the Nirav Modi fraud, the ABG Shipyard fraud, and the Yes Bank crisis. These controversies could damage the bank’s reputation and make it more difficult for the bank to attract investors and customers.

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