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Buy Federal Bank, target price Rs 65: Motilal Oswal

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Motilal Oswal has given a buy rating to Federal Bank with a target price of Rs 65. The share price moved up by 1.98 per cent from its previous close of Rs 50.55. The stock’s last traded price is Rs 51.55.

Federal Bank Ltd., incorporated in the year 1931, is a banking company (having a market cap of Rs 10275.77 Crore).

Financials
The Bank reported a Gross Non Performing Assets (Gross NPAs) of Rs 3712.07 Crore (.00 % of total assets) and Net Non Performing Assets (Net NPAs) of Rs 1525.66 Crore (.00% of total assets).

For the quarter ended 30-06-2020, the company reported a Consolidated Interest Income of Rs 2827.74 Crore, down -1.40 % from last quarter Interest Income of Rs 2867.78 Crore and up 5.89 % from last year same quarter Interest Income of Rs 2670.52 Crore. The bank has reported net profit after tax of Rs 411.58 Crore in latest quarter.


federal-graph
Investment Rationale
Federal Bank has posted slight increase in sequential loan base v/s overall decline for the system. The bank’s liability franchise remains strong -CASA mix is improving and FB has maintained one of the highest LCRs amongst banks. On the asset quality front, the brokerage expects the restructuring book in low single-digits; however, credit cost should stay elevated in the near term. It maintains Buy with a TP of INR 65 (0.8x FY22E ABV).


Promoter/FII Holdings
Promoters held 0 per cent stake in the company as of June 30, 2020, while FIIs held 30.95 per cent, DIIs 36.62 per cent and public and other 32.43 per cent.

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