Federal Bank - Concall Highlights - Nirmal Bang

Federal Bank arranged a concall yesterday to address the concerns on likely impact on the banks business on account of falling gold prices and recent changes in Saudi Arabia's immigration policy.

Key highlights:

- The bank has gold loan portfolio of Rs 6200 cr and nearly 10-12% of its deposits comes from Indians based in Saudi Arabia.

- The recent drop in the gold prices has resulted in an increase in the banks LTV ratio to 77-78% which was nearly 60% earlier.

- However, management added that there is no immediate stress seen on the portfolio as the company is taking watchful steps for the same.

- The current tenure of the product on an average is 5-6 m and the average lending rate is 15.5%.

- On Saudi Arabia issue the bank said that it's currently a non issue for the bank as the number of people reportedly affected from the state of Kerala is very small at about 500.

The stock has corrected nearly 11% in the last 10 trading sessions on these concerns and currently is trading at P/ABV of 1.22x FY13E and 1.09x FY14E ABV and P/E of 9.17x FY13E and 7.89x FY14E which is attractive. We believe that this decline offers an attractive entry point and the stock can be accumulated here and on decline from a long term perspective.

Source : Equity Bulls

Keywords