Federal Bank - A Solid Baseline Offers Opportunity To Reset Upper Ceiling: HDFC Securities

HDFC Securities Institutional Equities

With its loan book at Rs 2.2 trillion and its deposit base at Rs 2.7 trillion, Federal Bank Ltd. has broken out from the league of mid-sized banks and is now closer to larger banks in terms of scale.

With a granular deposit franchise, a carefully crafted accident-free loan book, and investments in the right areas, we believe the incumbent CEO has positioned Federal Bank on a solid platform.

We believe that Federal Bank has the requisite quality in its top and middle order to build further on these core strengths and plug key gaps around pricing power, and productivity and efficiency gains to fortify its position as a one-of-its kind credible alternative to the larger private sector banking peers.

We maintain Buy with a target price of Rs 225 (1.5 times Mar-26 adjusted book value per share).

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