Buy Federal Bank; target of Rs 142: Sharekhan

Written By Unknown on Jumat, 18 Juli 2014 | 16.02

Sharekhan is bullish on Federal Bank and has recommended buy rating on the stock with a target of Rs 142 in its July 17, 2014 research report.

Sharekhan`s research report on Federal Bank

"Federal Bank reported a net profit of Rs220 crore for Q1FY2015 contributed by a steady growth in the NII (up 11% YoY). The pre-provisioning profit declined by 10% YoY due to a lower treasury income compared with Q1FY2014. The margin (adjusted) improved sequentially to 3.25% during the quarter. The asset quality continues to improve partly contributed by a control on slippages and sale of NPAs to ARCs (Rs141 crore in Q1FY2015). The bank restructured Rs88 crore worth of loans in Q1FY2015. The comfort on asset quality increased as the loans under watch declined from about Rs400 crore a few quarters ago to Rs150-200 crore in Q1FY2015."

"Over the past few quarters the bank has delivered on key metrics and is now focusing on improving the balance sheet and fee income growth. This should lead to an improvement in the RoA. The management is aiming for RoA of 1.3% and 1.5% in FY2015 and FY2016 respectively. An improving outlook on asset quality and a strong capital position are among the key positives for the stock. We maintain our Buy rating on the stock with a price target of Rs142," says Sharekhan research report.

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To read the full report click here


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