HDFC Securities is bullish on Federal Bank has recommended buy rating on the stock with a target price of Rs 62 in its research report dated May 29, 2020.
HDFC Securities' research report on Federal Bank
FB’s 4QFY20 PAT was below estimates due to higher opex and provisions. We’ve cut our earnings to factor in (1) NIM compression as the fall in yields is likely to outstrip any CoF reduction given the significant proportion of floating rate loans and (2) higher provisions, given low PCR and extrinsic factors. Depressed RoAEs in the near term with a gradual recovery cause us to assign a measly multiple (0.8x).
Maintain BUY with a TP of Rs 62. A strong liability franchise and valuations underpin our stance.
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