Hold Federal Bank; target of Rs 55: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on Federal Bank

Federal Bank reported a steady set of Q1FY21 numbers wherein lower provisioning led to healthy PAT growth. Moratorium witnessed a reduction with asset quality remaining steady, as estimated As on July 12, net moratorium book (excluding gold loans/loans against liquid securities) of the bank was at 24% vs. 35% on May 25 led by a fall in retail moratorium book. Total provisioning for the quarter slumped to Rs 395 crore (~32 bps of advances), including Covid-19 provisioning of Rs 93 crore. Outstanding contingent provisioning was at Rs 186 crore.

Outlook

We maintain HOLD and value the stock at 0.8x FY22E ABV with a revised target price of Rs 55. The ambiguity on extension of term of the current MD remains a near term overhang.

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