Rakesh Jhunjhunwala stock gains marginally after one of the leading and well known financial services institutions IDBI Capital gives ‘Buy’ recommendation on this Bank with an upside potential of 33 percent.
Federal Bank
With a Market capitalization of Rs. 35,451 crores, on Thursday the shares of Federal Bank were trading flat from its previous day close price at Rs. 146.40.
Federal Bank is engaged in providing a wide range of banking and financial services including retail banking, corporate banking, treasury operations, Foreign exchange etc.
IDBI Capital, one of the leading and well known financial services institution , has given a ‘Buy’ tag on the company’s shares with a target price of Rs. 195 indicating a potential upside of 33 percent as compared to the current market price of Rs. 146.60.
The rationale behind providing such a recommendation pertains to various trigger points comprising, the company’s Robust Credit growth sustained as its Loan book grew by 20 percent YoY and up 5 percent QoQ as against 21% YoY (Q1FY24).
Improvement in the bank’s asset quality, as GNPA stood at 2.26 percent vs 2.38 percent QoQ and NNPA at 0.64 percent vs 0.69 percent QoQ and the Slippage ratio declined to 0.78 percent vs 1.12 percent QoQ led by retail.
The bank’s Net Interest Margins (NIMs) improved by 1bp QoQ to 3.16% led by capital raised during the quarter and the Cost to income ratio increased to 52.5 percent vs 50.9 percent QoQ.
The Bank’s focus on the higher margin products by leveraging on its digital, analytical and branch lite partnership based model should support higher return ratios.
As per the financial statements of the company its revenue grew 22.69 percent from 16,502.46 Cr in FY22 to 20,248.01 Cr in FY23, accompanied by increasing profits of 1,965.4 Cr to 3,175.76 Cr.
The company reported a return on equity (ROE) of 15.36 percent and a return on capital employed (ROCE) of 12.96 percent, the company is performing well and is trying to increase its profitability ratios over the years.
According to the latest shareholding data available for the June 2023 quarter, the company’s Promoters hold 0.00 percent stake, the Domestic Institutional Investors hold 46.14 percent and the Foreign Institutional Investors (FII) hold 27.02 percent.
Written by: Bharath K.S
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