Buy Federal Bank; target of Rs 165: Sharekhan

Sharekhan is bullish on Federal Bank has recommended buy rating on the stock with a target price of Rs 165 in its research report dated December 19, 2022.

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December 20, 2022 / 15:10 IST

26 Aug, 2025 12:21

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Sharekhan's research report on Federal Bank

We believe now consistent steady performance could drive re-rating in the stock, as probability of improvement in return ratios is less likely going forward. However, deterioration in return ratios is unlikely from here on, as the asset-quality outlook is stable to positive for the sector along with strong improvement in operating performance, which is likely to sustain over the medium term. Potential value unlocking in Fed Fina (NBFC subsidiary) via an IPO could be an additional catalyst for the stock and may help to strengthen capital ratios; currently tier I capital ratio is at ~12.6%.

Outlook

At the CMP, the stock trades at 1.3x/1.2x/1.0x its FY2023E/24E/25E BV. We expect ~1.2% ROA/~14% ROE in FY2025E. We maintain our Buy rating on the stock with a revised PT of Rs. 165.

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