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IDBI Capital Report
Federal Bank Ltd. shares are likely to remain in focus after IDBI Capital reiterated its ‘Buy' rating on the stock and raised its target price following a strong Q4 FY26 performance.
The brokerge said that Federal Bank has reported a strong Q4 underscoring a deliberate pivot toward granular, high-yielding growth while maintaining balance sheet discipline.
Advances grew 13% YoY and total business expanded 12% YoY, led by commercial banking and gold loans (~26% YoY each). CASA crossed the Rs 1 lakh crore milestone (up 21% YoY), reflecting strengthening liability franchise.
Net profit hit a record Rs 1,145 cr (up ~10% QoQ), supported by steady net interest income and 24% YoY fee income growth. NIM stood at 3.20%, with management focused on defending margins via liability repricing and asset mix.
Asset quality is best-in-class with net non-performing asset at 0.37% and provision coverage ratio at 76.55%, while cost/income improved to 52.9%. Improving mix, fee diversification, and operating leverage support a 1.3-1.4% ROA trajectory.
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