IIFL Securities Stock Idea: Buy Federal Bank with Target Rs 210

IIFL Securities has issued a buy recommendation for Federal Bank with a target price of Rs 210, implying a potential upside of 3.9% from the current market price of Rs 202.15. The recommendation is based on the bank's strong fundamentals, including robust deposit growth, improving asset quality, and healthy capital adequacy ratios. The bank's focus on retail and SME lending is expected to drive future growth opportunities.

About Federal Bank:

Federal Bank is a leading private sector bank in India, headquartered in Aluva, Kerala. Established in 1931, the bank offers a comprehensive range of banking products and services to individuals, small businesses, and corporates. Federal Bank has a strong presence in South India with over 1,300 branches and ATMs spread across 28 states and union territories. The bank has a customer base of over 15 million and a deposit base of over ₹1.5 lakh crore. Federal Bank is known for its customer-centric approach and financial inclusion initiatives.

52 Week Price Trend:

Federal Bank currently trades at Rs 202.15, well above its 52-week high of Rs 166.65. This significant premium suggests strong market sentiment towards the bank. However, it's important to note that the bank's 52-week low of Rs 120.9 indicates a substantial potential downside risk. Investors should carefully consider these price extremes and conduct thorough research before making any investment decisions.

Stratzy's MOST Analysis:

Based on Stratzy's MOST framework, FEDERALBNK has been rated BB, indicating a medium level of fundamental risk. This rating is derived by evaluating the company's Management, Outlook, Safety, and Trend. The BB rating suggests that the company has a sound management team, a positive outlook, and a strong safety profile. However, there may be some concerns regarding the company's current trend, which could potentially impact its overall performance in the future.

Company's Fundamentals:

Federal Bank (NSE: FEDERALBNK) is a leading private sector bank in India. Its stock has a Price-to-Earnings (PE) ratio of 9.55, which indicates that investors are willing to pay 9.55 times the bank's annual earnings for a share. The Price-to-Book (PB) ratio of 1.45 suggests that the bank's market value is 1.45 times its book value, indicating a premium over its asset value. Finally, the Dividend Yield of 0.66% represents the annual dividend paid per share as a percentage of the current share price, indicating a modest income potential for investors.

Fundamental and Technical information provided in this blog were last updated on 30 Oct, 2024

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