Buy Federal Bank, target price Rs 175: HDFC Securities

HDFC Securities has buy call on Federal Bank with a target price of Rs 175. The current market price of Federal Bank is Rs 135.15.

Federal Bank, incorporated in the year 1931, is a banking company (having a market cap of Rs 28409.25 Crore).

Federal Bank key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 5262.58 Crore, up 7.69 % from last quarter Total Income of Rs 4886.58 Crore and up 27.57 % from last year same quarter Total Income of Rs 4125.30 Crore. The bank has reported net profit after tax of Rs 843.25 Crore in latest quarter.

Investment Rationale
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. The brokerage believes that the bank appears to be on track to deliver its targeted RoA of 1.25% for FY23 with a further 5-10 bps RoA accretion over the next couple of years, driven by higher risk-adjusted margins and better productivity.