Sharekhan's research report on Federal Bank
Federal Bank reported PAT of Rs. 903 crore (up 67% y-o-y/12% q-o-q), which was 10% above consensus estimates mainly driven by higher other income and lower credit costs. Adjusting for higher other income, earnings would have lagged consensus estimates. NII was 5% below consensus estimates, reported at Rs. 1,904 crore (up 25% y-o-y/ down 2% q-o-q). Margins saw decline by 18 bps q-o-q to 3.31% led by higher repricing of deposits (cost of deposits up by 55 bps q-o-q) partly offset by higher yields. The bank reported muted operational performance sequentially as Core PPoP was down by 1% q-o-q however on y-o-y basis, it reported solid Core PPoP growth of 58%. Slippages were higher by 10% q-o-q mainly led by higher slippages from the agri segment but strong recoveries & upgrades led to stable asset quality performance. We believe the bank is likely to sustain a RoA of 1.2% + over the medium term.
Outlook
We believe the bank is likely to sustain a RoA of 1.2% + over the medium term. At CMP, the stock trades at 1.1x/0.9x its FY2024E/FY2025E BV estimates. We maintain our Buy rating on the stock with an unchanged PT of Rs. 170.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
