Market cap of the bank rose to Rs 87,044 crore. Total 15.64 lakh shares of the bank changed hands amounting to turnover of Rs 53.93 crore.
In terms of technicals, the relative strength index (RSI) of the stock stands at 56.4, signaling the stock is trading neither in the overbought nor in the oversold zone. Federal Bank shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Axis Securities said it has a buy call with a target price of Rs 405 per share.
According to the brokerage, the bank continues to consistently deliver on its charted path to deliver improved return on assets.
The bank remains well poised to sustain healthy balance sheet growth, led by strong traction across focus segments along with continued portfolio optimisation and a structurally improving liability franchise.
The brokerage expects NIMs to improve gradually over the coming quarters, aided by asset repricing as the rate cycle reverses, calibrated growth in higher-yielding segments and sustained efforts to strengthen the CASA mix, though deposit competition and its impact on CoF remains a key monitorable.
Robust core fee income and benign credit costs should support earnings growth, while continued investments in distribution, tech and franchise are likely to keep cost ratios elevated in the near term.
While the fundamental levers for sustained earnings growth remain intact, the ambiguity around the inorganic acquisition and its resultant impact on risk/profitability metrics could weigh on stock performance.
It raised target price to Rs 405 per share against the earlier target of Rs 400/share.
On the other hand, JM Financial has a reduce rating on the stock with a price target of Rs 330. The brokerage is of the view that the current valuation adequately reflects the improved outlook.
"While we are increasing FY27E EPS estimates by 4.7%, we maintain REDUCE with a TP of INR 330 (INR 320 earlier) based on 1.6x FY28E adjusted BVPS as we believe the current valuation adequately reflects the improved outlook. Inorganic acquisition strategy of bank also remains a key factor to monitor. We build in average RoA/RoE of 1.3%/12% over FY27E–29E," said JM Financial.
Brokerage Anand Rathi has a buy call on the banking stock.
The brokerage expects further improvement in fee income, and moderate credit costs to support a gradual improvement in RoE to 14% plus by FY29. "We maintain BUY with an SOTP-based TP of Rs 406, valuing the bank at 1.7x FY28e P/ABV and assigning Rs20/share to Fedfina and IDBI Federal Life. However rumoured acquisition of Jana SFB could be long term ROE dilutive and remains key risk to our BUY thesis.
Q2 earnings
The lender reported a 45.10% rise in Q2 net profit to a record high of Rs 1,386.09 crore. Asset quality came at a decadal best with gross NPAs improving to 1.32% and Net NPAs to 0.17%, both decadal lows. These are improvements of 51 bps and 31 bps YoY, respectively.
Meanwhile, earnings per share rose 44.34% to Rs 22.26. Operating profit rose 35.35% to Rs 2,225.37 crore. Net interest income rose 26.38% to Rs 3,153.40 crore, ahead of advances growth of 21.66%.
NIMs expanded 26 bps YoY to 3.32%. Cost of funds fell 40 bps YoY. Cost of deposits declined 39 bps YoY to 5.18%.
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