Buy Fedbank Financial Services; target of Rs 150: ICICI Securities

ICICI Securities's research report on Fedbank Financial Services

Fedbank Financial Services (Fedfina) is best placed in the current cycle by: 1) staying ahead of the curve in recognizing stress in S-LAP (three quarters ago); and 2) revamping its entire vertical to ensure quality growth and M-LAP alongside the gold loans business (low delinquencies), contributing >70% of total AUM and reducing the share of unsecured BL (~2% of AUF as on Jun’25). Further, ~70% fixed rate book (24% S-LAP and 40% gold), along with an annual reset for the rest of the floating rate assets and 45% of borrowing being EBLR/repo linked, provides tailwind to NIMs. Credit cost moderating to 80bps vs. 100bps QoQ, even during challenging times, leading to RoA improvement of 10bps QoQ to 2.3% during Q1FY26, is testimony of its successful execution of revamped business strategies.

Outlook

Maintain BUY with an unchanged TP of INR 150, valuing the stock at 1.75x PBV on Sep’26E BVPS.