Federal Bank (FB IN) – Q1FY27 Result Update – Consistent improvement in earnings quality – Accumulate
Published on 18 Jul 2026
FB saw a strong quarter yet again as core PPoP/PAT beat PLe by 9.9%/13.5% due to better NII/NIM. Bank is well on course in executing its stated strategy and this was the fourth quarter of a positive surprise. Reported NIM improved by 13/39bps QoQ/YoY to 3.33% led by (1) increase in mid-yielding segment by 200bps YoY to 45.5% (2) rise in avg. CASA by 190bps YoY (3) good QoQ growth in PL/CC (4) use of surplus liquidity. RoA is guided to improve by 3-4bps each quarter. We raise NIM for FY27/28E by 12bps each leading to core PAT upgrade of avg. 5.0%. As we roll forward to Sep’28 ABV and increase multiple to 1.6x from 1.5x, we raise TP to INR 345. Retain ‘ACCUMULATE’.
