Federal Bank Ltd. share price target

We attended Federal Bank analyst day, where in Mr. K.V.S Manian, the recently appointed MD& CEO, presented its strategy.

MD&CEO Mr. Manian well articulated FB's medium-term strategy (FY25-28E) which includes CASA/NIM/fee expansion and opex efficiency. Branches would be re-oriented to be more customer centric and sales driven. FB aspires to be among the top pvt. sector banks by improving return ratios which would entail superior balance sheet management by focusing on profitable growth and better asset/liability mix. FY24 NIM/core RoA was 3.1%/1.1% while for larger peers it ranged between 3.5-4.9% and 1.6-2.3% suggesting that execution and...

Federal Bank (FB) hosted its analyst meet, presenting a strategic vision under the leadership of MD & CEO Mr. KVS Manian to position itself among the top five private sector banks in India.

After the course correction in 3Q, Federal Bank hosted an analyst meet to unveil its long-term (next 3-5 years) business strategy (Plan 4.0) under the aegis of new MD & CEO KVS Manian (ex-Kotak), per which it plans to strengthen its core and tweak its asset/liability profile toward delivering sustained RoA of over 1.4% from 1.2% now.

Under new MD Manian (ex-Kotak), Federal has adopted a risk calibrated growth strategy from 3Q itself (down to 16% YoY from a high of 19-20%), and made accelerated provisions (Rs2.9bn) leading to a 10% miss on PAT at Rs9.6bn (1% RoA).

We maintain our BUY recommendation on the stock

Federal Bank (FB) reported 3QFY25 earnings of INR9.5b (7% miss), amid accelerated provisions, while PPoP stood broadly in line.

Q3FY25 numbers were a mixed bag. With a change in management, the reorientation undertaken is not surprising however we acknowledge that it will take few quarters to understand its full implication as execution happens on ground.

Quarterly Update Q2FY25