'Buy' Federal Bank Shares Maintains Motilal Oswal, Revises Target Price — Here's Why

Federal Bank is strategically realigning its growth approach by optimizing its asset mix toward medium- and high-yield segments, while maintaining strong asset quality. The bank is prioritizing gold loans, LAP, and commercial banking, with the mortgage portfolio expected to remain subdued in the near term..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.The Federal Bank Ltd.’s focus on asset mix diversification and operational efficiency has boosted its resilience against macro volatility. While challenges persist, Federal Bank’s conservative credit stance, robust provisioning, and customer engagement strategies offer a well-defined roadmap to steady growth. With ongoing liability optimization, focus on improved asset mix, and controlled credit cost, the bank is on a path to improved profitability. Its CASA initiatives, branch rationalization, and tech investments provide scalability while keeping costs under control. Federal Bank trades at 1.2x FY27E adjused book value, thereby offering an attractive opportunity for investors seeking stable, risk-adjusted returns. Management’s guidance points to a gradual margin recovery, with credit costs contained at around 55bp (recovery in H2) and sustained growth in granular lending segments. We expect Federal Bank to deliver 1.2% RoA in FY27, with further improvement to be witnessed in FY28 at 1.3%. We estimate the bank to clock ~27% PAT CAGR over FY26-FY28. We remain optimistic about Federal Bank’s execution and delivery, and reiterate a Buy rating with a revised target price of Rs 235 (premised on 1.5x FY27E BV)..Click on the attachment to read the full report:.Aditya Birla Capital Is Well-Positioned To Achieve The Next Phase Of Growth, Says Motilal Oswal; Maintains Buy.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.

'Buy' Federal Bank Shares Maintains Motilal Oswal, Revises Target Price — Here's Why

Federal Bank trades at 1.2x FY27E adjused book value, thereby offering an attractive opportunity for investors seeking stable, risk-adjusted returns, adds Motilal Oswal.

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