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Federal Bank’s 3QFY17 results were better than our expectations. PAT growth of 26.4% YoY, with stable asset quality and accelerated loan growth were the key developments during the quarter. After exhibiting meaningful improvement in FY17 both in terms of asset quality and earnings, the beginning of FY18 has, remained subdued for the bank, however as we have mentioned earlier, large part of the stress in the loan book is over for Federal Bank and baring some minor hiccups we don’t expect material deterioration in asset quality. We remain positive about the banks performance going ahead. At the CMP, the stock is trading at 1.8x it FY19 Adj BV. We maintain BUY on the stock with a target price of Rs 140.

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