This Private Sector Bank Stock Can Rise Upto 30.6%, Has Rallied By 53.34% In 1-year

Institutional Research, a stock broking firm after visiting Federal Bank's analyst day meet valued the private sector bank. The brokerage firm believes that the price of the private sector bank stock would rise upto 30.6%. The details were shared in a coverage report. Check the details here.

Federal Bank Limited, is one of the oldest private bank from the pre-independence era. It was incorporated on 1931, as the Travancore Federal Bank Limited, Nedumpuram under the Travancore Companies Regulation, 1916, the Bank was renamed as The Federal Bank Limited in December 1949, under the stewardship of K.P. Hormis, who took over its reigns in 1945.

Licensed under the Banking Regulation Act, 1949, on July 11, 1959, the Bank went on to become a scheduled commercial bank on July 20, 1970. It is headquartered in Aluva,Kochi, Kerala and is currently the fourth largest bank in India in terms of capital base. Its market capitalisation is Rs 28,359.46 crore.

As per the coverage report, on the analyst day, Federal Bank showcased its growing capabilities and a larger roadmap in its medium-term journey to emerge as a top-tier bank. "Even as the Federal Bank fortifies its existing moats on the deposit side of the balance sheet (best-in-class granularity with retail deposit mix at around 90%), the bank is aiming to judiciously improve the mix of high-yielding businesses (7% of loans), especially on the back of its maturing FinTech partnerships in the areas of credit cards, personal loans, and MFI loans. The bank is confident of leveraging its FinTech ecosystem partnerships and expanding the contours of ETB and NTB product offerings, thus driving further business productivity on both sides of the balance sheet."

Institutional Research explained that it marginally tweaked the earnings estimates of Federal Bank. "Federal Bank appears to be on track to deliver its targeted RoA of 1.25% for FY23 with a further 5-10bps RoA accretion over the next couple of years, driven by higher risk-adjusted margins and better productivity. We marginally tweak our FY23E / FY24E earnings estimates to factor in these changes; maintain BUY, with a target price of Rs 175 per share (1.6x Sep-24 ABVPS)."

The stock price of Federal Bank ended at Rs 134.10, it was down by 0.07% on intraday basis. In three years the share price has risen up by 46.96% and in one year it grew by 53.34%. Its 52-week high is at Rs 143.35 per share and its 52-weeks low is at Rs 82.50 per share.

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