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LKP Securities
Federal Bank (Accumulate)
CMP: ₹114.80
Target: ₹140
Incorporated in the year 1949, Federal Bank Ltd is a major commercial private sector bank headquartered at Aluva in Kerala. As on March 31, Federal Bank has 1,252 branches and 1,667 ATMs with a diversified and young workforce (average age <37 years). With a vision of being the ‘Most Admired Bank’ which is digitally enabled, there is a sharp focus on micro, medium and middle market enterprises.
Federal Bank has a well-defined business architecture enabling it to tap opportunities across the full product spectrum with retail-oriented approach and granular liability franchise being a key differentiator. In FY17, the balance sheet grew 26 per cent to ₹1.15 lakh crore and total business of the bank augmented 25 per cent to ₹1.17 lakh crore.
Federal Bank’s growing loan book, strong and granular liability profile with a healthy CASA will be key drivers to a stable growth going forward. Owing to superior asset quality and good return ratios, Federal Bank scores over its peers. The recent QIP at ₹116 helped raise ₹2,500 crore to fund its growth.
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