Federal Bank: What explains this stock's recent below-par show

Enough room for an uptick in RoA on the back of stable margin, steady fees, and benign credit costs

Madhuchanda Dey
June 06, 2023 / 05:09 PM IST
Federal Bank: What explains this stock's recent below-par show

Federal Bank had reported great headline numbers in Q4 FY23.

PRO Only Highlights
-  Quarterly performance largely backed by improved realisations
-  Medium-term triggers China plus and protectionist measures for tyre industry
-  Valuations not inexpensive; but improved medium-term outlook

Highlights Stock underperformance post strong headline numbers in Q4 Street excessively concerned about sequential interest margin decline Do not expect significant margin decline from hereon Asset quality not a cause for concern, credit cost to remain benign Robust loan growth, deposits catching up Fees stable, cost well contained RoA expansion to continue Extremely undemanding valuation Federal Bank (CMP: Rs 126, Market cap: Rs 26,705 crore) had reported great headline numbers in Q4 FY23. However, the stock’s relative underperformance – down close to 10 percent against a 4 percent...