Buy Federal Bank; target of Rs 225: Motilal Oswal

Motilal Oswal is bullish on Federal Bank has recommended buy rating on the stock with a target price of Rs 225 in its research report dated January 28, 2025.

Broker Research

January 29, 2025 / 21:33 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on Federal Bank

Federal Bank (FB) reported 3QFY25 earnings of INR9.5b (7% miss), amidaccelerated provisions, while PPoP stood broadly in line. NII was in line, while NIM stood broadly flat (down 1bp QoQ to 3.11%), as thebank focuses on reorienting its asset mix with a vision to improve yields. Advances stood flat as the bank followed a conservative policy to stay awayfrom unsecured lending. Deposits declined 1% QoQ as the bank reducedwholesale deposits by INR40b. The CASA mix improved 9bp QoQ to 30.2% Fresh slippages increased 15% QoQ to INR4.98b. GNPA/NNPA ratios declined14bp/8bp, respectively, to 1.95%/0.49%, while restructured book declined 3bp QoQ to 0.7%. We cut our estimates by 3.5%/2.6% for FY26/27E respectively, and estimate RoA/RoE of 1.3%/14.6% by FY27E. Reiterate BUY rating with a TP of INR225 (1.4x Sep’26E ABV).

Outlook

We cut our estimates by 3.5%/2.6% for FY26/27E, respectively, and estimate RoA/ RoE of 1.3%/14.6% by FY27E. Reiterate a BUY rating with a TP of INR225 (1.4x Sep’26E ABV).

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