Buy Federal Bank; target of Rs 60: Anand Rathi

Anand Rathi 's research report on Federal Bank

NIM expansion, higher fee income and lower opex led to a strong 40% y/y increase in Federal Bank’s Q2 operating profits. Rs4bn standard asset provisions made during the quarter led to a ~26% y/y decline in earnings. With a standstill on NPA recognition, asset quality and PCR improved. Collection efficiency for the bank reached 95% in Sep’20 (pre-covid levels).

Outlook

We maintain our positive view on the bank at a TP of Rs60 valuing it at 0.7x P/ABV on its FY22e book.

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