Target: ₹168.50
CMP: ₹146.90
Federal Bank Ltd’s (FBL) loan book stood at about ₹2.1 lakh crore, which grew by 21 per cent on y-o-y and sixper cent on a q-o-q basis during the quarter, with the retail loan book growing ahead of the overall loan book at 24 per cent on a y-o-y and sixper cent on a q-o-q basis. The wholesale segment grew by 17 per cent on a y-o-y and sixper cent on a q-o-q basis.
Deposits grew by 19 per cent and threeper cent on a y-o-y and q-o-q basis, respectively. NII reached ₹2,120 crore, with about nineper cent growth on a y-o-y and threeper cent on a q-o-q basis, registering a NIM of 3.2 per cent. The management expects stable NIM in FY24 and FY25.
The Bank’s asset quality is maintained on a q-o-q basis, with the GNPAs at 2.3 per cent.
We have revised our estimates and maintained our view on Federal Bank with a Buy rating and a target price of ₹168.5 (1.5x FY25E Adj. book value). We expect that the bank will be able to achieve 18-20 per cent growth in the loan book and maintain an NIM of 3.2 per cent. We expect the trend of improvement in asset quality to continue.