Motilal Oswal has given Buy recommendation for Federal Bank recommended buy rating on the stock with a target price of Rs 155 in its research re with a target price of Rs. 155 in its research report issued on Oct 14, 2022
Motilal Oswal’s research report on Federal Bank
FB reported a strong quarter with a PAT of INR7b (up 53% YoY and 17% beat), aided by NIM expansion and higher ‘other income’ even as the bank prudently increased the PCR to ~69%. Margin improved 8bp QoQ to 3.3%. Gross advances grew 19.4% YoY, led by a broad-based pickup across all business segments. Corporate grew the fastest at 21% YoY, followed by SME/ Retail/Agri at 20%/18%/18%, respectively. Its CASA ratio stood at ~36.4%. Slippages (including an increase in the balance of existing NPAs) moderated to INR3.9b (~1.1% of loans), led by a 40% QoQ decline in the Retail segment. GNPA/NNPA ratio moderated to 2.5%/0.8%, while restructured loans improved 20bp QoQ to ~2%. FB remains our preferred pick among mid-sized banks and we estimate it to deliver an RoA/RoE of 1.2%/14.2% in FY24. We reiterate our Buy rating on the stock.
We raise our FY23/FY24 earnings estimate sharply by 10%/9%, factoring in higher NII and ‘other income’ and expect a RoA/RoE of 1.2%/14.2% in FY24. We reiterate our Buy rating with a revised TP of INR155 (1.4x FY24E ABV).
At 17:30 Federal Bank was quoting at Rs 130.25, up Rs 5.45, or 4.37 percent.
It has touched an intraday high of Rs 132.10 and an intraday low of Rs 125.10.
It was trading with volumes of 2,517,956 shares, compared to its thirty day average of 1,015,321 shares, an increase of 148.00 percent.
In the previous trading session, the share closed down 0.64 percent or Rs 0.80 at Rs 124.80.
The share touched its 52-week high Rs 132.10 and 52-week low Rs 78.70 on 14 October, 2022 and 27 December, 2021, respectively.
Currently, it is trading 1.4 percent below its 52-week high and 65.5 percent above its 52-week low.
Market capitalisation stands at Rs 27,477.46 crore.