Buy Private Sector Midcap Banking Stock, Scrip Rallies 9.08% In 1 Week, Target Price Rs 155

Axis Securities initiates coverage on Federal Bank with a Buy rating for a target price of Rs 155 apiece. Given the target price, the brokerage claims a potential upside of up 17% from its current level if purchased at a current market price. Federal Bank is a private sector midcap bank. It has a market capitalisation of Rs 28,219.91 Crore.

The bank reported a healthy advances growth of 21/5% YoY. Growth in both the Retail and Corporate segment continued to remain healthy at ~20/22% YoY respectively. The mix of Retail to Corporate has remained stable at 54:46 YoY/QoQ, according to Axis Securities.

Outlook & Recommendation

According to Axis Securities, Business growth continues to remain robust with no visible sign of slowing down so far. While margins could remain soft in H1FY24, improving the share of higher-yielding products in the portfolio mix along with stabilising CoF are likely to aid margins in H2FY24.

"We remain confident in FB's ability to deliver a consistent RoA of 1.3% despite margin pressures. The current valuations of 1.1x Sep'24E ABV are undemanding for an expected strong RoA/RoE delivery of 1.3%/15-16% over the medium term. We re-iterate a BUY on the stock with a target price of Rs 155/share, implying an upside of 22% from CMP," the brokerage has said.

Stock Movement

The last traded share price of Federal Bank on BSE is Rs 133.30 apiece, up 0.98% from its previous close. It hit an intraday high of Rs 134.10 and an intraday low of Rs 131.70 on Wednesday, Jun 05, 2023.

It touched its 52-week high at Rs 143.35 apiece on Jan 16, 2023, and 52-week low at Rs 94 apiece on Jul 06, 2022.

The shares jumped 9.08% in the past 1 week, while 4.75% in the past 1 month. It gave 40.98% in the past 1 year, 52.78% in 2 years, 151.51% in 3 years, and 62.56% in 5 years, respectively.

Disclaimer

The stock has been picked from the brokerage report of Axis Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.