Buy Federal Bank; target of Rs 444: Angel Broking

10833 Investors following Federal Bank. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Federal Bank; target of Rs 444: Angel Broking

Angel Broking is bullish on Federal Bank and has recommended buy rating on the stock with a target of Rs 444 in its October 21, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy United Phos; target of Rs 171: Motilal Oswal Buy Indiabulls Real; target of Rs 130: Motilal Oswal Buy Yes Bank; target of Rs 360: Motilal Oswal ALSO READ See previous views by Angel Broking See what other Experts & Brokerages are saying about Federal Bank See messages about Federal Bank Federal Bank BSE | NSE 01/06/12 Are Mutual Funds betting on Federal Bank?

Angel Broking is bullish on Federal Bank and has recommended buy rating on the stock with a target of Rs 444 in its October 21, 2011 research report.

"For 2QFY2012, Federal Bank recorded strong net profit growth of 36.2% yoy (up 30.8% qoq), above our estimates, mostly due to lower provisioning expenses than built in by us. The bank's asset quality improved significantly during the quarter, with slippages reducing by Rs 58cr sequentially and credit cost improving by 46bp qoq."

"For 2QFY2012, advances and deposits registered strong growth. Advances grew by 21.6% yoy (up 5.1% qoq) to Rs 33,607cr and deposits grew by 30.9% yoy (up 10.1% qoq) to Rs 47,263cr. CASA deposits grew by a less impressive 14.5% yoy compared to deposit growth, leading to CASA ratio shrinking by 367bp yoy (down 151bp qoq) to 25.7%. Including NRE deposits, total low-cost deposits constituted 31.3% of total deposits (32.8% in 1QFY2012). A major portion of the bank's loan book is on a floating basis, which led to a sharp rise of 76bp qoq in yield in advances to 12.7% in 2QFY2012. However, cost of deposits also rose by 42bp qoq, leading to a sequential 10bp decline in reported NIM to 3.8%. During 2QFY2012, non-interest income remained flat sequentially (down 18.8% yoy) at Rs 117cr. CEB income came in at Rs 31cr (flat qoq), however recoveries continued to be weak at Rs 14cr, declining by 41.4% qoq. Asset quality of the bank witnessed a significant improvement in 2QFY2012, with gross NPA ratio declining by 33bp qoq to 3.6% and net NPA ratio declining by 16bp qoq to 0.6%. Slippages for 2QFY2012 reduced by Rs 58cr sequentially to Rs 265cr (annualised slippages ratio at 3.3%). The bank had witnessed higher retail slippages in 1QFY2012 due to one-off employee-related issues."

"At the CMP, the stock is trading at 1.0x FY2013E ABV. While lower leverage is leading to low RoE at present, the bank's core RoA is relatively high. We recommend Buy on the stock with a target price of Rs 444," says Angel Broking research report.    

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment