Buy Federal Bank; target of Rs 210: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Federal Bank has recommended buy rating on the stock with a target price of Rs 210 in its research report dated January 28, 2025.

Broker Research

January 30, 2025 / 12:17 IST

Buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Federal Bank

FB reported a weak quarter as loan/deposit accretion was muted, leading to lower fees, while core PAT missed PLe by 12% due to higher provisions. Balance sheet growth was impacted as the bank is re-calibrating its asset and liability mix to improve quality, stability and sustainability, which may lead to better NIM. This strategy involves a more balanced approach as (1) focus is on midyielding products (e.g., BuB, CoB, LAP) while slowing down growth in high/lowyielding products like unsecured/housing/corporate and (2) there is a shift to avg. CASA (vs period end) while reducing reliance on bulk deposits. To factor in unsecured stress, FB has moved to a more conservative provisioning policy; provision guidance is 40-45bps.

Outlook

We trim loan growth in FY25/26/27E by 6%/2%/2% to 12%/14%/14%. Due to lower loan growth and higher provisions, we cut core PAT for FY25/26/27E by 4.7%/4.4%/8.5%. As we trim multiple on Sep’26 ABV to 1.3x from 1.4x our TP reduces to Rs210 from Rs220. Retain ‘BUY’.

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