Accumulate Federal Bank; target of Rs 120: Arihant Capital

Arihant Capital's research report on Federal Bank

For the quarter ended Q3 FY18 Federal bank reported strong profitability. The net profit stood at Rs.260 cr vs. Rs.206 cr in the corresponding quarter of the previous year and Rs.264 cr in the sequential quarter.

Outlook

We expect the bank to accelerate CASA accretion and also to focus on digitalization with continuous growth in active digital user and increasing FedMobile transaction volume. At CMP stock trades at P/ABV multiple of 2.0x on FY 19E. We have valued the stock at P/ABV multiple of 2.25x & arrived at fair value of Rs 120 per share and have ‘ACCUMULATE’ rating.