Brokerages reiterate 'Buy' recommendation on Federal Bank with potential to return 15%
1 min read . Updated: 02 Mar 2023, 05:00 PM IST
Premium- HDFC Securities maintain their Buy rating on Federal Bank and set a target price of ₹175
Private sector lender Federal Bank remains confident of clocking market share gains in high-yield segments and driving higher business productivity on both sides of the balance sheet, said HDFC Securities in its report on Thursday.
HDFC Securities maintain their Buy rating on Federal Bank and set a target price of ₹175.
The lender appears to be on track to deliver its targeted RoA of 1.25 per cent for FY23 with a further 5-10 basis points RoA accretion over the next couple of years, driven by higher risk-adjusted margins and better productivity.
"Any incremental RoA reflation over FY23-25 will be driven by better risk-adjusted margins (+5-10bps) and healthy productivity and efficiency gains (greater business throughput)," the brokerage said.
"Through consistent brick-by-brick execution, Federal Bank has emerged as the best-in-class among mid-sized banks with a visible pathway to emerge as a top-tier bank in the medium term. We marginally tweak our FY23-FY25 forecasts by 1-2% to adjust for higher risk adjusted margins and better operating leverage," the noted stated.
ICICI direct
- Federal Bank's share price has increased 43 per cent in the past year. Successful delivery of planned strategy with healthy growth, improved efficiency and consistent provision coverage coupled with effective capital consumption bodes confidence.
- BUY rating and maintain our target price at ₹165 per share.
Motilal Oswal
- Believe that Federal Bank is well placed to deliver RoA expansion, led by controlled credit costs and a rise in the mix of high-yielding segments. Moreover, the bank’s strong liability franchise will help it lower the cost of funds, which should support margins.
- The bank plans to add branches in a calibrated manner and improve its digital capabilities, which should drive operating leverage.
- We estimate an earnings CAGR of 16 per cent over FY23-25 with RoA/RoE of 1.3/15.2 per cent by FY25.
- BUY rating on Federal Bank with a target price of ₹170.
Nuvama
Brokerage firm Nuvama Wealth has also recommended buying shares of Federal Bank for a target price of ₹180 per share.On Wednesday, the stock closed at ₹134. Investors can earn a return of ₹46 per share or about 34 per cent.
On Thursday, shares of Federal Bank dipped 0.82 per cent to settle at ₹133.25 apiece.