Buy Federal Bank; target of Rs 130: ICICI Direct

ICICI Direct's research report on Federal Bank

Federal Bank raised capital in 2008. A slowing economy led to low growth at 13.9% CAGR in FY10-16 vs. 26.9% CAGR in FY06-08. Corporate credit growth stayed strong at 53% YoY and SME 16%. Share of AAA/AA rated has gone up to 52%, depicting rated corporate exposure.

Outlook

Consequently, we revise our target price upwards to Rs 130 from Rs 110 earlier, as we assign a multiple of 2.1x FY19E ABV. We maintain our BUY recommendation on the stock.