Federal Bank (FB IN) – Event Update – Blackstone invests 10% equity post-money – BUY
Published on 24 Oct 2025
Board approved preferential issue of up to 272.97mn warrants at Rs227 p.s. to Asia II Topco XIII Pte. Ltd. i.e. Blackstone for Rs61.97bn. 25% of the amount i.e. Rs15.49bn would be payable at time of subscription post RBI and shareholder approval while remaining 75% will be payable within 18 months of allotment. This suggests a pre/post money dilution of 11.1%/10.0% at a valuation on Sep’27 ABV of 1.3x (normal 1.2x) indicating that the raise is BV accretive. CET-1 may increase by 200-250bps to 17.0-17.5%. Accretion to FY27/28 ABV would be 4.1/2.7% while ROE might fall by 11/63bps to 12.1%/11.9%; EPS for FY28 may be 7% lower. NIM for FY27/28E increases 2/3bps to 3.10/3.13%. Capital raise is a positive since it would strengthen the balance sheet and support growth. Also, it gives FB leeway to plan for an inorganic acquisition. Due to a stronger balance sheet and increase in ABV, we increase multiple slightly to 1.4x from 1.3x on Sep’27 ABV and raise TP to Rs250 from Rs235. Retain ‘BUY’.
