Shares of Federal Bank are seen breaching their record high in a year. The private lender's stock climbed to an all-time high of Rs 216.90 on December 5, 2024. But brokerages are bullish on this Jhunjhunwala stock despite the recent correction. 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 December 2024 quarter.
The banking stock fell 8.25% in three months and slipped 15% in six months. This year, the stock has fallen 11%.
On Monday, the stock was trading on a flat note at Rs 178. The banking stock slipped to a 52-week low of Rs 139.80 on March 14, 2024. Market cap of the bank stood at Rs 43,445 crore. The banking stock has a one-year beta of 0.8, indicating average volatility during the period.
Total 8261 shares of the bank changed hands amounting to turnover of Rs 14.71 lakh on BSE.
In terms of technicals, the relative strength index (RSI) of the stock stands at 37.1, signaling the stock is trading neither in the oversold nor in the oversold zone. Federal Bank shares are trading lower than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. Mirae Asset Sharekhan has a price target of Rs 220.
"Federal Bank aspires to be a universal lender with a nationwide franchise and among the top 5 private sector banks over the next 3-5 years. It is eyeing an improvement in the return ratios (RoA/RoE) that is closer to top 3 private banks," said the brokerage.
"The bank has set an ambitious goal but execution remains key. We remain assertive on the franchise from medium to long term thus maintain a Buy rating on the stock with an unchanged PT of Rs. 220. At CMP, the stock trades at 1.2x / 1.1x its FY2026E/ FY2027E BV estimates, added Mirae Asset Sharekhan.
"We tweak our estimates (still conservative), and raise SOTP based target to Rs218 (21 per cent upside). Post 17 per cent correction in stock price, risk-reward is favourable, and we upgrade our rating to Buy," said IIFL Securities.
MOFSL maintained its 'Buy' call on the stock with a target price of Rs 225.
With a legacy spanning over 93 years, a dominant presence in Kerala, and a refreshed focus on becoming a more comprehensive bank, Federal Bank is charting a path of sustainable growth, profitability, and technological advancement, said MOFSL.
MOFSL said the bank has emphasised scaling its operations prudently by prioritising better-yielding loans, enhancing its liability franchise, and leveraging digital capabilities.
Nirmal Bang has kept its price target unchanged at Rs 226 with a 'BUY' call. "In our view, the bank has come out with a well-crafted strategy of focusing on leveraging its existing strengths and taking it forward from here by aiming to close the gaps in terms of products, new businesses, customer segments and geographies. However, execution will be key here. We continue to maintain 'BUY' on Federal Bank with an unchanged target price of Rs 226," Nirmal Bang Institutional Equities said.