After the fraud in IDFC First Bank, there was a sharp fall in the shares of the company. Its shares fell by 20 percent on Monday. However, later it started improving. In such a situation, the question in the minds of investors is whether the shares of this bank will go up from here. Is this the right opportunity to invest in it or there may be further decline. Let us tell you what should be done in such a situation.
In fact, this huge decline has had a direct impact on the valuation of the company. At the same time, the confidence of investors has also been broken after this scam. Talking about technical terms, the price-to-book (P/B) ratio of the bank has come down to 1.3, which is the lowest level in the last three years. Whereas three years ago this ratio was around 1.
Fraud has happened in many banks before also
After the huge fall in bank shares, everyone may consider this dip as an opportunity to buy, but if we turn the pages of history, the matter tells something different. Many such cases have happened in the banking sector before. Which shook the investors. Be it the case of RBL Bank or IndusInd Bank or Yes Bank. This has been seen in every case. These banks also had to face many types of situations. But it took a long time for share prices and valuations to return to old levels. Once trust is broken, it is not easy to rebuild it. Talking about the share of Yes Bank itself, the all time high price of its share was around Rs 404, which is now swinging between Rs 18 to Rs 21 even after so many years. Market experts believe that once the investor’s confidence is broken then it becomes very difficult for the stock to reach its previous level.
Why did IDFC shares become favourite?
Actually, in the last few years, IDFC First Bank had made a big change in its strategy. The bank’s Net Interest Margin (NIM) increased from less than 2% to around 6%, while the bank reduced its corporate loans, increased focus on retail/consumer lending and improved asset quality. The result of which was that IDFC was successful in winning the trust of investors.
what can happen next now
But after this fraud, many questions have now arisen. Investors are wondering whether this fraud is limited to just one branch? Will depositors’ confidence be affected? Could the regulatory investigation go further? Due to these questions, market experts believe that the stock may remain under pressure for some time. In such a situation, if you are also thinking of earning money from IDFC, then you should be a little cautious.