Federal Bank Ltd. share price target

The bank's top-line performance was up as net interest income increased by 20% to Rs 950 crs compared to Rs 791 crs YoY & Rs 899 crs QoQ. Other income de-grew by 17% to Rs 229 crs YoY. C/I ratio for the bank dropped to 52.37% vs. 55.48% YoY and increased sequentially from 50.83%. NIM's stood steady at 3.33% vs. 3.32% in...

Maintain BUY with a TP of Rs 138 (2x Dec-19 ABV of Rs 69). Asset quality mishaps dragged FBs 3Q performance, even as the bank continues to deliver on most operational metrics. Core earnings (+20%) were in line with estimates led by stable NIM (3.33%) and sustained loan growth. Controlled cost escalation (+7% YoY), healthy fee growth (22%) and a drop in provisions (-8% QoQ) led to a net earnings beat (7%). CASA ratio was steady at ~33%, despite the higher base.

We believe that the Bank will continue to deliver further improvement in operational performance led by improving loan book growth and improving assets liability mix. Further, continued moderation in SMA-2 balance clearly suggests fresh slippage will show declining trend in FY19. Notably, the Bank is gradually coming out of the scenario marked with higher provisioning and continued stress on asset quality for last few quarters. Looking ahead, we expect the strong traction in earnings to continue owing to robust growth in loan book, moderate credit cost and healthy margins. We have introduced estimates for FY20E and expect the Bank's earnings to witness 33% CAGR through FY17-20E. We reiterate our BUY recommendation on the...

FB recorded PPoP growth of -4%/18% QoQ/YoY (INR5.6b; 4% miss), driven by a5% miss on total income (24% beat on other income, which declined 20%/13% QoQ/YoY to INR2.29b). The impact, however, was partly offset by a 5% beat on opex, which grew 2%/4% QoQ/YoY to INR6.2b, as employee expenses fell4%/6% QoQ/YoY. Core PPoP growth was strong at 5%/37% QoQ/YoY. NII growth came in at 6%/20% QoQ/YoY (1% beat), aided by 22% YoY loan growth and a stable NIM of 3.33% (+2bp QoQ). Other income fell 20%/13% QoQ/YoY, driven by sharp moderation in treasury gains (-61%/-66% QoQ/YoY). Loan growth of 5%/22% QoQ/YoY was driven by corporate book growth of30% YoY. Retail/agri and SME loans also maintained strong traction (up 18%and 20% YoY, respectively)

Federal Bank is one of the largest private sector banks in South-India and has set on a transformational journey to become a new generation bank with focus on SME & Retail lending.. Over the last 3 years, the bank has strategically expanded its operations outside the home state of Kerala

NII for the Q2FY18 come at RS. 8989 mn by growing 23.8% YoY and 12.3% QoQ basis NII for the Q2FY18 come at RS. 8989 mn by growing 23.8% YoY and 12.3% QoQ basis

Maintain BUY with a TP of Rs 137 (2x Sept-19 ABV of Rs 68). After being marred by an expected yet large corp slippage in 1Q, FB delivered a stellar set of numbers. PPOP sustained an uptrend as loans (+25%) and fees (+23%) continued to grow. Stable NIMs (~3.31%, albeit up 18bps QoQ), steady asset quality (net stressed assets at ~3.1%), controlled opex and a well- diversified asset book augurs well for FB.

Fabulous Performance on All Fronts; Maintain BUY Federal Bank has surprised the market for another quarter by delivering strong growth in operating profit and loan book. Its operating profit grew by 22.8 YoY and 4.5% QoQ to Rs5.8bn led by 23.8% YoY & 12.3% QoQ growth in NII. Provisioning expenses declined by 25.2% QoQ led by steady decline in fresh slippages and improvement in upgrades and recoveries. Consequently, its PAT grew by 31% YoY & 25.5% QoQ to Rs2.6bn in 2QFY18. The Bank showed greater resilience on asset quality front with its gross and net NPAs remaining within the Management's comfort...