Buy Federal Bank, target price Rs 213: Axis Securities

Axis Securities has a Buy call on Federal Bank with a target price of Rs 213. The current market price of Federal Bank is Rs 191.5. Federal Bank, incorporated in 1931, is a banking company with a market cap of Rs 46915.18 crore.

Federal Bank's 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-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 8196.02 crore, up 2.25% from last quarter Total Income of Rs 8015.29 crore and up 17.19% from last year same quarter Total Income of Rs 6993.55 crore. The bank has reported net profit after tax of Rs 944.15 crore in the latest quarter.

Investment Rationale
With the new management at the helm, Federal Bank strategy re-orientation revolves around ensuring sustainable, profitable growth while maintaining strong asset quality metrics. A clear focus on improving profitability with better NIMs and strengthening the fee profile should enable FB to deliver RoA/RoE of 1.2-1.3%/13-15% over the medium term with a scope of further gradual improvement, on the back of impeccable strategy execution. Axis Securities recommends a BUY rating on the stock with a target price of Rs 213/share, implying an upside of 10% from the CMP.

Promoter/FII Holdings
Promoters held $Parser.toNumber($MarketsData-marketResults.newShareHolding.summary.promoters.percentage) per cent stake in the company as of 31-Dec-2024, while FIIs owned 26.32 per cent, DIIs 48.5 per cent.