Federal Bank Ltd - Long term growth prospects intact - Geojit

Federal Bank Ltd is a Indian commercial bank in the private sector headquartered in Kerala having 1,276 branches and 1,937 ATM / Recyclers and a loan book size of ~Rs 1,20,862cr.

- Due to Covid 19 pandemic we expect banks advances to fall by 4% in FY21E and recover in FY22E compared to previous estimates.

- Low interest rate regime and fall in credit growth could hurt NIM in Q1FY21. However, bank's plan to increase its ROA to 1.25% by improving NIM with a better advance mix is expected to bear fruit in the long term.

- Stock is trading at ~62% discount to last 5-year average P/B (1yr fwd) as slow growth concerns seems already factored in , we value the stock at 0.8x Adj.BV of FY21E with a target price of Rs.58 and recommend Buy rating.

Shares of FEDERAL BANK LTD. was last trading in BSE at Rs.45.95 as compared to the previous close of Rs. 42.15. The total number of shares traded during the day was 2234671 in over 5818 trades.

The stock hit an intraday high of Rs. 46.35 and intraday low of 43.25. The net turnover during the day was Rs. 100397130.

Source : Equity Bulls

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