Anand Rathi's research report on Federal Bank
Lower margins, less Treasury income and higher opex led to a ~500bp weakened C/I ratio; moderating provisions, however, counterbalanced the weak operating performance keeping RoA at 1% for Federal bank. Asset quality improved as slippages were less than anticipated. With the lower formation of stress than earlier envisaged, recoveries in earnings would be better. Given the bank’s strong liability franchise and capitalisation, it is set to gain market share in the near term.
We maintain our positive view on it with a Rs.115 target, valuing it at 0.9x P/ABV on its FY24e book.
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