Positive on Federal Bank; stock can touch 120-130 levels by year end: Hemang Joshi

In a chat with ET Now, Hemang Jani, Sr VP, Sharekhan, shares his view on small-sized banks.

ET Now: I want your views on the small-sized banks that have announced their Q1 numbers. The numbers by DCB Bank were not the best of numbers; the stock got hammered in the last two days. In the case of South Indian Bank as well, there were some issues and the stock fell 5- 6 per cent on Wednesday. Any chink with some of the non-PSU small-sized private banks you think?

Hemang Jani: Actually, we like the larger players in the sense that something…

ET Now: Which everybody likes? What about the smaller-sized banks?

Hemang Jani: The only small-sized bank we like is Federal Bank. In the last two or three quarters, we have seen healthy operating performance. This ex-bonus thing too also worked pretty well for them. Somewhere down the line, we think that certain banks could be takeover candidates. Though one cannot be sure about the timing of that, but in terms of valuations Federal Bank is among few lenders which attract me.

Otherwise, it makes more sense to stay focus on the larger lenders. With the sheer management quality and stability of earnings these smaller banks holds a lot of promise. That said, we have seen that they have not really performed on the numbers front.

ET Now: So, what is the right way to look at Federal Bank? A majority of investors rarely gets it right?

Hemang Jani: A majority would get it right.

ET Now: This time? Are you confident?

Hemang Jani: Yes, absolutely.

ET Now: Federal Bank is ruling at Rs 77 at present. Do you think the stock to climb to Rs 100 in this year?

Hemang Jani: Yes, very easily. It can be 120-130 bucks.