Stock in Action Federal Bank 19 November 2024

Highlights

1. Federal shares saw a marginal rise, trading at ₹ 197.60 with an intraday high of ₹ 198.00.  

2. The federal stock price remains resilient, nearing its 52-week high of ₹ 209.75 amidst market volatility.  

3. Brokerages project the federal share price to reach ₹ 240 in the next 2-3 quarters, signaling strong growth potential. 

4. Federal stocks are trading at an attractive P/E ratio of 11.75 & a P/B ratio of 1.21, appealing to value investors.  

5. The robust Q2 performance has bolstered investor confidence, driving optimism around federal stock price growth.  

6. Analysts recommend buying federal shares in the ₹ 202-207 range for a projected upside to ₹ 250.  

Why is Federal Bank Share in News? 

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Federal Bank Ltd. has recently gained market attention with its stock showing resilience amidst market volatility. Trading at ₹ 197.60 on Monday, the stock has displayed a notable performance with an intraday high of ₹ 198.00 & a 52week high of ₹ 209.75. Its recent movements in the market reflect strong investor confidence, bolstered by its successful maiden issuance of ₹1,500 crore infrastructure bonds, priced at a coupon rate of 7.76%. This issue was oversubscribed, highlighting the growing interest from institutional investors like insurance companies & pension funds.  
Additionally, Federal Bank’s Q2 financial results & analyst insights indicate a positive growth trajectory, making it a key player in the private banking sector. Noteworthy stakeholders such as Rekha Jhunjhunwala have maintained significant holdings, further elevating investor sentiment.  

Q2 Performance of Federal Bank

Federal Bank reported robust Q2 financials, with consolidated sales climbing to ₹8,015.29 crore, marking a 4.59% growth from the previous quarter & a 22.4% rise yearonyear. The net profit surged by 10.8% to ₹1,056.7 crore, compared to ₹954 crore in the same period last year.  

The bank's interest income also rose to ₹6,577 crore from ₹5,455 crore a year ago, signaling improved earnings from core operations. Asset quality remained strong, with gross nonperforming loans (GNPL) at 2.09% & a provision coverage ratio (PCR) improving to 73% from 72%.  

A key highlight was the stability in credit cost, which stood at 28 basis points. Despite marginally rising GNPLs, the management assured investors of maintaining healthy asset quality, especially in microfinance (MFI), supported by higher rejection rates for loans & colending initiatives through the BC model.  

Brokerages' Overview of Federal Bank's Shares

Brokerages have expressed optimism about Federal Bank’s future prospects. 

1. Axis Securities: The firm has a buy rating with a target high price. They highlighted Federal Bank's medium term uptrend & recent technical breakout above current. Volume activity during the breakout was a key indicator of growing investor interest.  

2. Centrum Broking: They maintained a bullish stance with a high price target, citing improvements in net interest margins (NIMs), reduced operating expenses, & enhanced return profiles under the new leadership.  

3. Nuvama: PostQ2 results, they projected a Above target price than CMP, emphasizing Federal Bank’s strong asset quality, healthy earnings growth, & ability to raise liabilities to fund growth.  

4. HDFC Securities: Their buy call high targets over the next 69 months. They believe the bank's focus on pricing power, efficiency gains, & crosssell capabilities will drive improved return on assets (RoA) & return on equity (RoE).  
The stock's valuation metrics further support these outlooks, with a pricetoearnings (P/E) ratio of 11.75 & a price to book (P/B) ratio of 1.21, making it an attractive option for investors.  

Conclusion

Federal Bank Ltd. has positioned itself as a promising contender in the private banking sector. With strong Q2 results, steady asset quality, & strategic initiatives such as infrastructure bond issuance, the bank is poised for sustainable growth. Brokerages remain optimistic, with price targets reflecting significant upside potential.