Vinod Nair Geojit Financial Services
Federal Bank Limited is a major Indian commercial bank in the private sector headquartered at Kerala with a loan book size of Rs 92,000 crore.
Strong growth across Retail, SME and Corporate segments led to 24% YoY growth in Loan book. GNPA is stable at 3 percent QoQ and NNPA ratio has slightly increased from 1.69 percent in Q4FY18 to 1.72 percent in Q1FY19.
We remain positive in the wake of lower slippages coupled with strong earnings growth. We factor 30 percent CAGR in earnings supported by 22 percent CAGR in loan book over FY18-20E. We value FB on FY20E Adj PBV at 1.6X and maintain our target price to Rs101 and recommend to Accumulate.
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