Federal Bank — Focused On Fixing The Right Gaps; Execution Remains Key, Says HDFC Securities Maintaining 'Buy'

With a rejig in priorities, the brokerage believes Federal Bank is well-placed to capitalise on its current balance sheet strengths (quality deposit franchise and superior underwriting standards) with clear catalysts for earnings reflation, compared to larger peers that are nearly-fully optimised..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. .HDFC Securities Institutional Equities.Federal Bank Ltd. hosted an analyst meet to spotlight the bank’s key priorities over the medium term to better monetise its balance sheet strengths: better current account-savings account mobilisation (especially CA balances) reflecting in lower cost of funds;scaling its medium-yield businesses driving stronger risk-adjusted returns; and higher fee income traction by building capabilities in areas of trade/FX income, wealth management, and CMS. Under the new MD, Federal Bank is embarking on a journey to address its deposit mix and the pricing power handicap on both sides of the balance sheet (highlighted in our Sep-24 update). While the strategic focus on profitability is a welcome move, the franchise is likely to go through an extended investment phase, which is likely to push the operating leverage benefits more towards FY27. With a rejig in priorities, we believe Federal Bank is well-placed to capitalise on its current balance sheet strengths (quality deposit franchise and superior underwriting standards) with clear catalysts for earnings reflation, compared to larger peers that are nearly-fully optimised. We tweak our estimates to factor in elevated opex intensity in FY26E, while building in operating efficiencies in FY27E. We maintain Buy with a revised target price of Rs 210 (1.3 times Sep-26 adjusted book value per share). .Click on the attachment to read the full report:.'Buy' Federal Bank To Get An Upside Of 19%, Says IDBI Capital — Here's Why.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.

Federal Bank — Focused On Fixing The Right Gaps; Execution Remains Key, Says HDFC Securities Maintaining 'Buy'

Under the new MD, Federal Bank is embarking on a journey to address its deposit mix and the pricing power handicap on both sides of the balance sheet, adds the brokerage.

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