Federal Bank's Target Price Raised By Brokerages After Strong Q3 Results
Yes Securities, Motilal Oswal and HDFC Securities maintain a 'buy' rating, Dolat Capital reiterates 'accumulate' on the stock.
The Federal Bank Ltd.'s target price has been raised by brokerages after it reported a 54% year-on-year rise in profit for the December quarter, aided by higher net interest income and improved asset quality.
While Yes Securities, Motilal Oswal, and HDFC Securities maintain a 'buy' rating, Dolat Capital reiterates 'accumulate' on the stock.
Out of the 37 analysts tracking the company, 34 maintain a 'buy' rating and three recommend 'hold', according to Bloomberg data.
Shares of Federal Bank Ltd. rose 0.50% in trade on Tuesday. Total traded volume stood at 2.5 times its 30-day average. The 12-month consensus price target implies an upside of 17%.
Federal Bank Q3 Results (YoY)
Net Interest Income up 27.14% at Rs 1,957 crore.
Net Profit rose 54% to Rs 804 crore.
Gross NPA at 2.43% in Q3FY23 vs 2.46% in Q2FY23.
Net NPA at 0.73% in Q3FY23 vs 0.78% in Q2FY23.
Here's what brokerages had to say about the earnings:
Maintains a 'buy' rating with a price target of Rs 185, implying a potential return of 32%.
Management enhanced the guidance for return on assets for FY23 to 1.25% and predicted it to be 10 basis points higher for FY24. They also said the rise would not be dominated by any one single factor.
Management guided for its loan growth to be in the high teens for FY24 stating that gold loans could grow at the pace of 25%.
Bank has added more than 60 branches so far this financial year and should add about 75 in total for the year.
Reiterates 'buy' rating with a revised target price of Rs 170.
Bank is still a popular choice among mid-sized banks, with an estimated return on assets and return on equity of 1.3% and 15.2% in FY25, respectively.
Deposit growth was healthy, while the current account savings ratio moderated to 34.2%.
Asset quality was driven by healthy recovery and upgrades.
Brokerage raises earnings estimates for FY23 and FY24 by 7% and 5%, respectively, due to higher NII and lower provisions.
Maintains an 'accumulate' rating with an expectation of a 10–20% return over a 12-month period.
Increased traction in the newly launched, higher-yielding loan segments of the company, including commercial vehicles, microfinance, and credit cards, will be NIM accretive, but their share remains marginal over the medium term.
Expect 5 basis points of moderation in return on assets from 1.2% in FY23 to 1.15% in FY24, versus management guidance of a 10 bps expansion in FY24.
Brokerage flags weaker than anticipated macroeconomic trends and its impact on growth and asset quality as a risk.
Reiterates a 'buy' rating with a target price of Rs 175.
Expects FY23 and FY24 earnings estimates to factor in lagged deposit repricing, offset by marginally lower provisions.
New loan segments, organically and by way of FinTech partnerships, are likely to begin accounting for a meaningful mix of the loan book by FY25.
Remain constructive on the bank's ability to dial up and monetise partnerships in newer loan segments to build scalable profit pools.