Federal Bank stock: Can Q1 results push share price above Rs 150?

Despite reporting 42% year-on-year (YoY) earnings growth in the June quarter, Federal Bank posted a negative surprise on net interest margin for the second quarter with NIM declining 16 bps quarter-on-quarter (QoQ).

Most brokerages have maintained buy ratings on the stock which was trading near the flatline on Friday at Rs 127 on BSE.

"Our key investment thesis remains unchanged, despite there being increased scrutiny on the NIM progression currently. The bank is well-poised to reach a RoA of more than 1.2% over the next few years. We like the franchise of Federal Bank in the regional banks space," Kotak Equities said.


Brokerage targets on Federal Bank after Q1 results:

Motilal Oswal on Federal Bank: Buy | Target price: Rs 155

We broadly maintain our estimates as controlled credit costs and healthy other income compensated for a slight moderation in NII growth. We estimate FB to deliver RoA/RoE of 1.3%/15.8% in FY25.

Morgan Stanley on Federal Bank: Equal Weight | Target: Rs 145

Morgan Stanley has an 'Equal Weight' rating on Federal Bank. NIM is near the trough, but recovery will be gradual. Asset quality remains comfortable though retail showed higher slippages from structured loans. Stock is not expensive at 0.9X F24 book but lacks a catalyst. The re-rating cycle looks likely to be delayed.

BofA on Federal Bank: Buy | Target: Rs 160

BofA has a 'Buy' stance on Federal Bank with a price target of Rs 160. Maintaining a growth trajectory is key to meeting targets.

Strong credit growth across segments and improving mix. FY24-growth momentum to sustain with stable NIMs.

JP Morgan on Federal Bank: Overweight | Target: Rs 150

JP Morgan remains 'Overweight' on Federal Bank and puts the price target at Rs 150. Higher deposit rates drive pressure on NIM. Asset quality was stable. Valuations are supportive when compared to mid-cap peers.

CITI on Federal Bank: Buy | Target: Rs 160

CITI has a 'Buy' view on the private lender. NIM contracts further on catch-up in deposits cost and interest reversals. Advances growth more broad-based. It expects improved growth, fee profile, and contained credit cost.