Anand Rathi has given Buy recommendation for Federal Bank with a target price of Rs. 100 in its research report issued on Jul 25, 2021
Anand Rathi’s research report on Federal Bank
Higher Treasury income and lower opex led to a sharp ~28% sequential increase in Federal Bank’s Q1 operating profits. Higher provisions during the quarter, however, kept earnings subdued, with the RoA at ~0.8%. With the lower formation of stress than earlier envisaged, recoveries in earnings would be better. Given the bank’s strong liability franchise, coverage and capitalisation, it is well placed to withstand Covid-related stress in the near term.
We maintain our positive view on the bank with a target of Rs100, valuing it at 0.9x P/ABV on its FY23e book.