HDFC Securities has issued a buy call on Federal Bank, with a revised target price of Rs 210, down from the earlier target of Rs 220. The current market price of Federal Bank is Rs 180.9. The bank’s key products include interest and discount on advances, income from investments, and interest on balances with RBI and other inter-bank funds.
The bank’s financials show a consolidated total income of Rs 8196.02 crores for the quarter ended December 2024, a 2.25% increase from the previous quarter and a 17.19% increase from the same quarter last year. The bank has reported a net profit after tax of Rs 944.15 crores in the latest quarter.
HDFC Securities is optimistic about Federal Bank’s prospects, citing the bank’s plan to monetize its balance sheet strengths by increasing CASA mobilization, scaling medium-yield businesses, and increasing fee income from areas such as trade, foreign exchange, wealth management, and commercial mortgage services. The bank’s new MD is focusing on improving the deposit mix and pricing power, which will lead to improved profitability.
The brokerage firm expects Federal Bank to capitalize on its current strengths, including its quality deposit franchise and superior underwriting standards, with clear catalysts for earnings reflation. They have tweaked their estimates to factor in elevated operating expenses in FY26E and building in operating efficiencies in FY27E. Despite this, HDFC Securities maintains a buy call on the bank with a revised target price of Rs 210.