Federal Bank (FB IN) – Q4FY26 Result Update – RoA delta to be driven by asset/liability mix – Downgrade to ‘ACCUMULATE’
Published on 30 Apr 2026
FB saw a decent quarter as core PPoP beat PLe by 9.5% due to better fees and TWO recovery. Interest on IT refund of INR 4.6bn was used to shore up PCR QoQ from 76% to 87.8% against likely ECL requirement; credit cost guidance of 50-60bps would be reassessed. We are factoring provisions of 48bps, but there are downside risks. While loan growth was a tad lower; recalibration is progressing well with targeted segments of CoB, gold, unsecured and LAP seeing good growth. Liability mix too is being refined with higher share of CASA/RTD. We tweak multiple on Mar’28 ABV to 1.5x from 1.4x and raise TP to INR 300 from INR 275. Change rating to ‘ACCUMULATE’ from ‘BUY’.
