Federal Bank (FB IN) – Management Meet Update – Strong execution leading to tangible outcomes – Upgrade to ‘BUY’
Published on 12 Aug 2026
We hosted FB’s senior management for a road show. The bank’s evolution is progressing well and the MD & CEO sounded confident of achieving the targets set out in Feb’25. Liability mix has improved with reduced bulk deposit share, while de-congestion at branches has led to consistent rise in avg. CASA from 27.3% in Q4FY25 to 30.7% in Q1FY27. Prudent balance sheet management with superior asset-liability mix has led to sustained NIM expansion over the last 1 year from 2.94% to 3.33%. NIM may further increase led by faster growth in mid-yield/unsecured loans and CASA. Fee to asset may see a fillip, although existing opex run-rate may sustain given the focus on increasing presence in metros. We raise core PAT for FY27/28E by 5%/11% led by higher NIM/fees. Due to improving earnings trajectory, we raise multiple to 1.8x from 1.6x on Sep’28 ABV and increase TP to INR 400 from INR 345. Upgrade to ‘BUY’ from ‘ACCUMULATE’.
