Accumulate Federal Bank; target of Rs 101: Geojit

Geojit recommended accumulate rating on Federal Bank with a target price of Rs 101 in its research report dated July 18, 2018.

Federal Bank Limited is a major Indian commercial bank in the private sector headquartered at Kerala having 1252 branches and 1696 ATMs spread across different States in India with a loan book size of ~ 92,000Cr. Interest income grew by 15% and reflected 22% growth in NII led by strong loan growth coupled with stable NIM PAT increased by strong 25% in Q1FY19 due to lower provisioning YoY. Stable GNPA ratio at 3%/ and NNPA ratio slightly increased by 3bps to 1.72% in Q1FY19 against 1.69% in Q4FY18. Loan book grew by 24% YoY with the strong growth across Retail, SME and Corporate segments, while deposits grew by 16% YoY. Robust retail network will lead to 22% CAGR in loan book and 30% CAGR in earnings over FY18-20E.

On the back of strong PAT growth against de-growth in last quarter & with healthy earnings outlook, we value FB at 1.6x FY20E adjusted BV and recommend Accumulate with a target price of Rs 101.

Capital Ways Investment Adviser

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