Federal Bank’s Apr-Jun profit grows 46% YoY; Should you buy or sell stock?

By: |
Published: July 17, 2019 12:35:54 PM

The shares of Federal Bank are trading lower on Wednesday after it reported 46.25% growth in its Apr-Jun profits on a yearly basis.

Federal Bank, Federal Bank Q1, Federal Bank total income, Federal Bank share, Federal Bank nse, Federal Bank results, Federal Bank stock, Federal Bank newsFederal Bank on Tuesday reported 46.25 per cent surge year-on-year in its Apr-Jun profits. Its standalone profits stood at Rs 104.30 per share, nearly 3 per cent down from the last close. 

The shares of Federal Bank are trading lower on Wednesday after it reported 46.25% growth in its Apr-Jun profits on a yearly basis. At 12:01 PM, the Federal Bank shares were last seen trading at Rs 104.30 per share, nearly 3 per cent down from the last close of Rs 107.35 per share on BSE. The private lender’s standalone profit stood at Rs 384.21 crore compared with Rs 262.71 crore in the same quarter of last year. The total income of the bank rose to Rs 3,620.82 crore during Apr-Jun of 2019-20, as compared to Rs 2,938.24 crore in the corresponding period of 2018-19. Keeping in view the bank’s impressive quarterly results both the analysts Financial Express Online spoke to have maintained BUY on the Federal Bank’s stock.   

Motilal Oswal Financial Services has raised its profit estimates by 0.9 per cent for FY 20 and 2.4 per cent FY 21. The brokerage firm expects 20 basis points expansion in return on assets and 13.3 per cent improvement in return on equity. It said the bank has limited exposure to stressed entities, while the healthy coverage ratio of 67.4 per cent will likely help controlled credit costs. It has maintained BUY on Federal Bank stocks with a revised target price of Rs 125 per share (1.6xFY21E ABV). The brokerage firm said the bank has maintained strong momentum in business growth and is reporting a gradual improvement in operating earnings. 

Federal Bank has limited exposure to stressed entities, while the healthy coverage ratio of 67.4% will likely facilitate controlled credit costs. With stronger growth in retail and management guidance of increasing the retail mix to 50%, the margins will likely improve gradually, Motilal Oswal noted. 

Meanwhile, Reliance Securities said the lower incremental stress from the corporate book is expected to aid Federal Bank’s overall slippages, even as the brokerage firm continues to be watchful of its SME and retail portfolio in Kerala. “Going forward, we expect decline in credit cost, improving operating leverage and traction in fee-based income to drive its profitability. We maintain our BUY recommendation on the stock with a revised Target Price of Rs 120 (from Rs 115 earlier), implying an adjusted PBV of 1.6x FY21E (from 1.5x earlier),” it said in a report. 

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.