Buy Federal Bank; target of Rs 150: Anand Rathi

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26 Aug, 2025 12:21

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Anand Rathi's research report on Federal Bank

Higher margins and fee income led to a 380bps sequential improvement in Federal Bank’s C/I ratio, which is now 48.9%. The strong operating performance and benign credit cost (53bps) led to the better RoA. Asset quality improved as slippages were less than 1%. With the lower formation of stress than earlier envisaged, recoveries in earnings would be better.

Outlook

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 Rs150 target, valuing it at 1x P/ABV on its FY25e book.

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Federal Bank - 171022 - anand