CLSA has initiated coverage on Federal Bank with a ‘Buy’ rating and a target price of ₹230, indicating an 18% upside from the current market price of ₹194.80. The brokerage highlights the bank’s strong history, conservative lending practices, and a robust non-resident (NR) deposit base as key strengths.
While the bank has historically delivered average profitability and remained a ‘local’ player, CLSA notes that the newly appointed CEO aims to scale Federal Bank’s return profile to match the top six private-sector peers. It projects return on equity (RoE) to rise to 14% by FY27/28, up from an average of 11% over the past decade.
Valuations are considered attractive, with the stock trading at 1.1x price-to-book and 9x price-to-earnings (FY27 estimates). CLSA believes the combination of stable fundamentals, improving profitability outlook, and low valuations make Federal Bank a compelling investment at current levels.
Disclaimer: This article is for informational purposes only. Investors are advised to consult certified financial advisors before making any investment decisions.