Federal Bank (FB IN) – Q2FY27 Result Update – Core revenue profile continues to improve – BUY
Published on 17 Oct 2026
FB saw a decent quarter due to core revenue beat; higher NII/fees were offset by opex drag leading to 2.8% miss in core PPoP. Loan growth adjusted for FCNR was healthy at ~4% QoQ, mainly led by mid/high yielding loans viz. BuB/CoB/gold/LAP/unsecured, which on a combined basis grew by ~7% QoQ. Over past 6 quarters share of mid/high yielding segments has consistently improved from 37% to 41% while avg. CASA share has enhanced by 330bps to 31%. NIM may surprise positively in upcoming quarters led by (1) credit flow shifting towards higher yielding loans (2) increasing CASA share (3) normalization of FCNR impact and (4) repo hike of 25bps. We keep multiple at 1.8x on Sep’28 ABV and maintain TP at INR400. Retain ‘BUY’.
