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Buy Federal Bank; target of Rs 135: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Federal Bank has recommended buy rating on the stock with a target price of Rs 135 in its research report dated May 08, 2022.

May 12, 2022 / 12:57 PM IST
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Prabhudas Lilladher's research report on Federal Bank

Federal Bank (FB) reported a mixed quarter as PPoP was lower led by NIM and opex miss although asset quality improved leading to lower provisions. Hence earnings at Rs5.4bn (PLe: Rs5.5bn) were largely in-line. Loan growth was a bit soft at 10% YoY led by slower accretion in CoB, BuB and CIB although housing growth was strong. FB is targeting a +15% credit growth in FY23E. Although, NIM was a miss led by agri slippages, it is expected to normalise to 3.25-3.30% as 47% of loans are EBLR linked. Opex is expected to normalise in FY23 and cost to income is guided to reach below 50% by FY24. Asset quality further improved indicating solid underwriting capability.


We remain optimistic on FB due to strong credit quality and balance sheet franchise. There is no material change in our FY23/FY24E earnings estimates. Maintain multiple at 1.4x FY24 ABV with TP at Rs135. Retain BUY.


For all recommendations report, click here

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first published: May 12, 2022 12:57 pm
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