LKP Research is bullish on Federal
Bank has recommended buy rating on the stock with a target price of Rs 121 in
its research report dated December 24, 2018.
28 Dec, 2018 15:59
93.25
LKP Research's
report on Federal Bank
Federal Bank has outgrown from the tag of old private sector bank by
doing market share wins in businesses, acquiring customers rapidly, improvising
processes & engagement levels with the clients, filling the service gaps,
mending digital initiatives in line with private sector banks, building strong
management bandwidth – to become at par with the other large private sector
banks. However, this larger picture has been ignored in the chaos of NPA mess.
Asset quality problems should also start to recede incrementally despite Kerala
floods. In our view, once the dust settles on asset quality woes, the bank
would get multiple re-rating. BUY with TP of 121, upside of 30%.
Outlook
The current valuations of the bank offer decent upside. Currently, the
bank is trading at 1.6x FY19e and 1.4x FY20e ABV. We give a BUY rating on the
stock with the TP of 121 (discounting its FY20E ABV by 1.8x times).
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