Accumulate Federal Bank; target of Rs 199: Geojit Financial Services

Geojit Financial Services recommended accumulate rating on Federal Bank with a target price of Rs 199 in its research report dated March 11, 2025.

Broker Research

March 12, 2025 / 13:44 IST

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Geojit Financial Services research report on Federal Bank

Federal Bank Ltd. (FBL) is an Indian private commercial bank, headquartered in Kerala. FBL owns 1,550 banking outlets with a gross advances size of Rs.2,33,749cr. Gross Advances grew modestly at 15% YoY, driven by a 49% YoY increase in Agri loans and a 20% YoY increase in SME loans. Deposit growth advanced by 11% YoY, with CASA accounts growing by 10% YoY. The CASA ratio stood at 30%. Net Interest Income grew by 15% YoY to Rs. 2,431cr. The Net Interest Margin (NIM) stayed flat at 3.1% sequentially. Slippages have increased marginally to Rs.484cr compared to Rs.428cr in the last quarter. But GNPA/ NNPA has improved to 1.95%/ 0.49% from 2.29%/ 0.64% in Q3FY24. PAT de-grew marginally by 5% YoY to Rs. 955cr due to a 220% YoY increase in provisions, attributed to an increases in slippages. Provision Coverage Ratio (PCR) was marked at 74.2%, up from 71.0% in Q3FY24.

Outlook

With valuations returning to long-term averages, we upgrade our rating to Accumulate with a revised target price of Rs.199, based on 1.2x FY27E BVPS.

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