Federal Bank Limited is a major Indian commercial bank in the private sector headquartered at Aluva, Kerala having more than thousand branches and ATMs spread across different States in India. The Bank is a pioneer among traditional banks in India in the area of using technology to leverage its operations and was among the first banks in India to computerize all its branches.
Vision : To be the ‘Most Admired Bank' which is Digitally enabled with a sharp focus on Micro, Medium and Middle market enterprises.
The last 1 year trend
Last one month trend
52 week High / Low : 110.40 / 35.70
CMP (19/6/2020) : 50.95
P/E : 6.58 ( Industry P/E : 23.72)
Book Value : 66.57
The stock in the last one month is showing a growing trend. It can be due to the banking stocks having a run. A book value, which is more than the current market price and the P/E is 1/3 of the industry.
What weighs down this stock?
- Interest earning is less than the interest cost. Have to earn more with the balances available.
- Operating profit % going down
- Decreasing NPAs
- Revenue is constantly increasing
- Focusing more on digital banking and automation.
With the thrust on MSME sector by the government and this bank is well poised to support them, as per their vision, I am sure the margins will definitely improve.
With all fundamental in place, if the bank does well in terms of deploying their funds to earn more income, I am sure it will do well in 2-3 quarters.
I feel the stock can reach 75-80 levels in 2-3 quarters, which is an upside of more than 50% of the CMP.
Let us wait and see.
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