Shares of Federal Bank hit their record high on Thursday even as broader market saw deep correction a day after stellar rally cheering Trump’s presidential win.Federal Bank shares climbed to a record high of Rs 207.80 on Thursday against the previous close of Rs 204.80 on BSE. This is the second instance in which the stock hit record high this week. On Monday, the stock reached a high of Rs 207.50. The banking stock stock slipped to a 52-week low of Rs 139.45 on January 23, 2024. Rekha Rakesh Jhunjhunwala, wife of late investor Rakesh Jhunjhunwala, held 3.45 crore shares or 1.42 per cent stake in the private lender at the end of September 2024 quarter.
Market cap of the bank on Thursday stood at Rs 50,300 crore. The banking stock has a one-year beta of 0.9, indicating average volatility during the period.
Total 1.50 lakh shares of the bank changed hands amounting to turnover of Rs 3.09 crore on BSE.
In terms of technicals, the relative strength index (RSI) of the stock stands at 65.2, signaling the stock is trading neither in the oversold 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 has a buy call on the banking stock with a target price of Rs 214-222. Stop Loss can be fixed at Rs 190.
"Federal Bank is trending within a medium-term rising channel on the weekly chart, recently finding support at the lower band and now advancing toward the upper band of the channel. It has broken above a small descending triangle pattern at the Rs 197 level within its rising channel, indicating a continuation of the medium-term uptrend. Volume activity declined during the pattern formation; however, it increased significantly at the breakout, indicating a surge of market participants entering at that point. The weekly RSI strength indicator crossed above its reference line, generating a buy signal," said the brokerage.
Centrum Broking has a buy call with a price target of Rs 250 on the stock.
"With the management transition, investors have set clear priorities: 1) enhancing NIMs, 2) reducing opex, and 3) improving the overall return profile. The new leadership has indicated that they will outline their strategic approach to address these areas by the next quarter. We view these development very positively. Also, we roll over to 1HFY27E and continue to assign 1.5x P/B to arrive at our revised target price of Rs 250. Maintain BUY with an upside of 35% from current levels," said Centrum Broking.
Nuvama has given a price target of Rs 235 post Q2 earnings.
"Slippage remained flat QoQ at 0.9% of lagged loans. Agri slippage rose 24% QoQ, slippage in COB fell sharply while slippage in BUB was flattish. Credit cost stood at a low 28bp. GNPL rose 3% QoQ while GNPL ratio was down marginally to 2.09%. PCR improved to 73% from 72% QoQ. Management remains upbeat about maintaining healthy asset quality in MFI given their higher rejection rate. The bank does MFI through BC model. Co-lending in MFI has just started and is a small portion. Given strong asset quality and healthy earnings growth, we maintain ‘BUY’. Management is confident about being able to raise enough liabilities to fund growth. MFI asset quality is likely to remain healthy. The stock is trading at 1.1x BV FY26E," said the brokerage.
HDFC Securities has assigned a buy call on Federal Bank with a price target of Rs 224-240 over 6 to 9 months.
“We believe that the key challenge for the franchise lies in leveraging its formidable balance sheet strengths into sustainable P&L outcomes (better pricing power, superior efficiency, and productivity gains) to fortify its position as a credible alternative to larger private sector banks. Consistent exercising of pricing power, and build-out of cross-sell capabilities are key to further RoA reflation. We remain hopeful of most of these being achieved by the Bank in the near to medium term. We expect FB’s RoA/RoE to improve from 1.3/14.7% in FY24 to 1.4/15.2% in FY27E. We believe investors can buy the stock in the band of Rs 202-207 and add on dips in Rs 182-187 band (1.15x Sep’26E ABV) for base case fair value of Rs 224 (1.4x Sep’26E EPS) and bull case fair value of Rs 240 (1.5x Sep’26E EPS) over the next 2-3 quarters,” said the brokerage.
The bank reported a 10.8% rise in net profit to Rs 1056.7 in Q2 compared to rS 954 crore in the same quarter last year.
Total income rose to Rs 7,541 crore in Q2 against Rs 6,186 crore in the same quarter last year. The bank reported an interest income of Rs 6,577 crore during the quarter, higher than Rs 5,455 crore in the same period a year earlier.