Federal Bank Ltd. share price target

In its FY21 Annual Report, FB highlighted the progress it is making in strengthening the Balance Sheet and the focus it is laying on building its Gold loans portfolio, along with the newly launched Credit Card product. Higher focus is placed on leveraging its...

We recommend BUY with TP of Rs. 100/share.

Federal Bank Ltd, is an Indian commercial bank in the private sector headquartered in Kerala having 1,272 branches and 1,941 ATM/ Recyclers with a loan book size of ~Rs1,31,879cr. Total advances grew by 9% YoY and 5% QoQ supported by 19% YoY growth in retail advances and 23% growth in agri advances....

We believe key positives for the company are its increasing retail focus, strong fee income, and adequate capitalization. We maintain a Buy with a target price of Rs 95 (1x FY23EABV), implying an upside of 13% from CMP.

Federal Bank reported mixed results wherein it saw an improvement in business growth and stable asset quality but with utilisation of Covidprovisions in the current quarter, additional provisioning buffer has reduced. Opex increased 4.7% QoQ due to increased business activity. Hence, as a result of subdued topline and increase in opex, C/I ratio jumped from 49.8% to 53.1% QoQ. The bank, during the quarter, used | 60 crore worth provisions towards restructuring under resolution framework and | 475 crore towards IRAC norms requirement, from | 536 crore Covid-19 provisions held in previous quarter. Overall provisions declined 42% QoQ....

Federal Bank has reported 4QFY21 earnings in line with our expectations led by a) Stable NII growth (16.8% YoY) with NIMs at 3.23%, b) relatively healthy business growth with net advance and deposit growth of 7.9% YoY and 13.4% YoY respectively, c) sequentially higher C/I ratio of...

35bn initially expected. It is 1% of loans. much lower provisioing. Although bank did maintain a steady PCR of 66% with slippage ratio of 1.5% and with lower baggage of unsecured. Operationally it was marginally weaker than expectation mainly on slightly slower NII & non-treasury non-fee income. Overall asset quality remains...

Federal Bank reported stable asset quality with GNPA at 3.41% vs 3.38% QoQ (vs 2.84% YoY) led by lower slippages and higher write offs. Covid Specific Restructuring assets stood at 1% of total advances well within guided range of 1.2-1.3%. However, stressed book % of assets which was declining for last 3 years spiked to 1.76% vs 1.08% QoQ due to Covid-19 impact. Net interest income grew by 17% YoY (24% YoY growth Q3FY21) led by improvement in NIMs which stood at 3.2%. Operating profit declined by 8% YoY driven by decline in other income (down 35% YoY; 3 % QoQ) while PAT grew by 59% YoY (18% QoQ) led by lower provisions (down 57% YoY; 42% QoQ. Collection efficiency...

FB's core performance remains steady, while muted treasury gains affected PPOP (8% YoY decline). However, lower provisions enabled healthy growth in net earnings (7% above our estimate). The bank fully utilized its COVIDrelated provision buffer. On the business front, advances growth sequentially improved 5% QoQ, led by both Retail and Wholesale. Deposit growth was led by CASA. On the asset quality front, total slippages stood at INR5.98b in 4QFY21 (annualized: 1.8% of loans). Total slippages stood at 1.4% of loans In FY21, broadly similar to pre-pandemic levels. GNPA ratio was broadly stable QoQ...

Federal Bank's (FB) Q4FY21 PAT at Rs 4.8bn beat our/consensus estimates on below-expected provisions.