Buy Federal Bank; target of Rs 180: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Federal Bank has recommended buy rating on the stock with a target price of Rs 180 in its research report dated January 17, 2024.

Broker Research

January 17, 2024 / 15:41 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Federal Bank

FB reported a steady quarter with NIM in-line at 3.33%; core PPoP missed PLe by 1.8% due to weaker fees. Asset quality was a owing to higher slippages led by a chunky corporate account of Rs700mn. While loan accretion was stable for the quarter at 18.4% YoY, tight systemic liquidity and deposit squeeze could compress system LDR. Bank would like to reduce LDR from 83% to 80% by CY24 end.

Outlook

Hence we lower loan growth over FY23-26E by 1% and cut FY25/26E NIM by 7bps each which would be partly offset by softer opex and credit costs. For FY24/25/26E we are factoring a RoA of 1.25-1.30% and NIM is the key driver for RoA upgrade; for margins to outperform it is imperative that quality of loan growth is superior by controlling credit flow in corporate and housing. Maintaining multiple at 1.4x on Sep’25 ABV, we keep TP unchanged at Rs180. Retain BUY.

For all recommendations report, click here