UBS has maintained its Buy rating on Federal Bank with a target price of ₹250, reflecting a potential upside from the current market price of ₹187.50. The Q2 results showed a profit after tax (PAT) beat, primarily driven by lower credit costs, while asset quality remained stable.
The bank demonstrated healthy loan growth, with CASA deposits rising by 4% quarter-over-quarter. Management reiterated their FY25E guidance, underlining confidence in their strategic outlook. UBS believes that any further clarity on the bank’s approach to enhancing net interest margins (NIMs) could serve as a near-term catalyst for the stock. UBS also highlights the attractive risk-reward profile, with Federal Bank trading at approximately 1.1 times its FY26E price-to-book value (P/BV).
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors are advised to perform their due diligence before making investment decisions.
