Federal Bank - Growth Outlook Steady; Getting Future-Ready Under New Leadership: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Federal Bank Ltd. posted a 20% compound annual growth rate in its loan book during FY22-24 and improved its return on asset to ~1.3% in FY24 from 0.9% in FY22, despite net interest margin pressure and higher cost ratios.In July 2024, Federal Bank received the RBI’s approval for Mr. Manian as the new MD and CEO starting Sep-24. With his extensive banking expertise, Mr. Manian is expected to drive strategic changes and drive next leg of growth and profitability for the bank after already delivering robust performance over the last few years.We estimate Federal Bank to achieve RoA of 1.3% and RoE of 15.2% by FY27, driven by improved margins and a continued shift toward higher-yielding products. As revenue growth outpaces cost growth, we expect the cost/income ratio to decrease to ~50% by FY27, down from 54.5% in FY24.With current valuations at 1.2 times FY26 book value presenting an attractive longterm investment opportunity, Federal Bank is well-positioned to leverage its strong balance sheet and extensive customer base for sustainable profitability. Supported by new leadership’s focus on growth, we maintain our Buy rating on the stock with a target price of Rs 230 (1.5 times FY26E adjusted book value)..Click on the attachment to read the full report:.Asian Stocks Advance Along With China Amid Disappointing Policy Briefing.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Federal Bank - Growth Outlook Steady; Getting Future-Ready Under New Leadership: Motilal Oswal

Supported by new leadership’s focus on growth, the brokerage maintains its Buy rating on the stock with a target price of Rs 230 (1.5 times FY26E adjusted book value).

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Federal Bank - Growth Outlook Steady; Getting Future-Ready Under New Leadership: Motilal Oswal

Supported by new leadership’s focus on growth, the brokerage maintains its Buy rating on the stock with a target price of Rs 230 (1.5 times FY26E adjusted book value).

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