Federal Bank Shares Gets Nirmal Bang's 'Buy' Upgrade; Target Price Hiked — Here's Why

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Nirmal Bang Report

Federal Bank Ltd. has issued 273 million warrants at a price of Rs 227, aggregating Rs 62 billion to Asia II Topco XIII Pte. Ltd, a Blackstone associate. These warrants are convertible into equity shares within a period of 18 months from the date of allotment.

Post exercise of these warrants into equity shares, these will represent 9.99% stake in the bank.

We have estimated the warrants to be converted into equity shares by FY26 end, which will result in 11.1% equity dilution and lead to an improvement of 280 bps in the CAR to 18.5% (from 15.7% in September 2025).

We turn positive on Federal Bank due to the following reasons:

• Loan growth to pick up,

• Strong patronage of depositors,

• NIM to remain stable at 3.1%,

• Visibly cleaner corporate book and low proportion of unsecured loans,

• RoA drivers.

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