IDFC First Bank vs Federal Bank Which Should You Buy?

IDFC First Bank and Federal Bank are two prominent players in the Indian banking sector, each having their own unique strengths and opportunities for growth. IDFC First Bank is a relatively newer entrant in the market, offering innovative products and services to cater to the needs of modern customers. On the other hand, Federal Bank has a strong presence and a long-standing reputation in the industry. Both banks have shown resilience and adaptability in the face of economic challenges, making them potentially sound investment choices for individuals seeking exposure to the banking sector.

IDFC First Bank or Federal Bank?

When comparing IDFC First Bank and Federal Bank, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between IDFC First Bank and Federal Bank.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. IDFC First Bank has a dividend yield of -%, while Federal Bank has a dividend yield of 0.56%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. IDFC First Bank reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, Federal Bank reports a 5-year dividend growth of 2.13% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with IDFC First Bank P/E ratio at 20.97 and Federal Bank's P/E ratio at 12.63. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. IDFC First Bank P/B ratio is 1.31 while Federal Bank's P/B ratio is 1.60.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, IDFC First Bank has seen a 5-year revenue growth of 3.12%, while Federal Bank's is 0.83%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with IDFC First Bank's ROE at 7.11% and Federal Bank's ROE at 13.68%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹63.07 for IDFC First Bank and ₹209.70 for Federal Bank. Over the past year, IDFC First Bank's prices ranged from ₹59.30 to ₹92.45, with a yearly change of 55.90%. Federal Bank's prices fluctuated between ₹139.40 and ₹217.00, with a yearly change of 55.67%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.