Buy Federal Bank; target of Rs 165: YES Securities

YES Securities is bullish on Federal Bank has recommended buy rating on the stock with a target price of Rs 165 in its research report dated October 14, 2022.

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October 17, 2022 / 18:32 IST

26 Aug, 2025 12:21

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YES Securities' research report on Federal Bank

Even the conservative management found reason to enhance margin and RoA guidance: Full year NIM guidance stands revised upward to 330 bps. Apart from yield, the other lever for NIM expansion is lower interest reversals. For the quarter, NIM improved 8 bps QoQ to 3.30%. This was driven by a 36 bps improvement in yield on advances QoQ. 110-115 bps of the rate hikes have got passed on. Management revised guidance for full year FY23 upward to 1.2% with exit quarter guidance now being 1.25%.

Outlook

We maintain ‘Buy’ rating on FED with a revised price target of Rs 165: We had flagged FED as one of our top 3 bank picks in our Sector Initiation Report dated June 2021. We value the standalone bank at 1.3x FY24 P/BV for an FY23E/24E/25E RoE profile of 13.6/14.5%/15.5%. We assign a value of Rs 8.7 per share to the subsidiaries, on SOTP.

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