Introduction
Every Monday, Axis Direct comes up with weekly recommendations known as Axis Direct Pick of the Week. These recommendations are backed up by in-depth research from Axis Direct, making them very reliable.
Axis Direct Pick of the Week: Federal Bank
For this week, Axis Direct picked Federal Bank based on fundamental analysis. Let’s take a detailed look into the Axis Direct Pick of the Week.
Background on Federal Bank
Federal Bank is a major private sector bank in India. It offers a wide range of financial products and services to customers across the country.
Fundamental Analysis Behind the Axis Direct Pick of the Week
Axis Direct’s research team conducted a thorough fundamental analysis of Federal Bank before recommending it as the pick of the week. They found that the bank’s financials were strong, and it had a lot of potential for growth.
Fundamental Details of Federal Bank
Federal Bank’s stock price as of date was Rs. 110. Axis Direct expected the stock to go up by 10% within a 6 month period, reaching the target price of Rs. 121. The bank had a market capitalization of Rs. 21,421 crores. Finally, with an investment horizon of 6 months, investors could expect a 10% return on investment, which could be annualized to 20% ROI.
Financial Performance
Federal Bank’s latest annual audit report showed a YOY growth of 15.6%. It had robust income growth of 38% YOY, and there was a 27% increase in core fees and treasury gains. Provisions for the quarter went up to Rs. 236.4 crores, which showed a 40.3% gain on a YOY basis. The GNPA ratio improved by 50 bps YOY, with the GNPA coming down to 2.42% in fiscal 2018 compared to 2.92% in fiscal 2017.
Growth Potential
The new corporate banking team of Federal Bank is expected to keep the present momentum growing, which would give a boost to the business in the corporate banking sector. Federal Bank had a total growth of 18% CAGR, which was expected to be maintained throughout fiscal 2017 to fiscal 2019, backed by overall growth in corporate, SME, and retail banking.
Additional Details
The dynamic management of the Federal Bank focused on containing slippage from corporate books, reducing the cost of borrowing, and growth in lending in both the corporate and retail sectors.
The picture below shows fundamental details like PAT, RoE, RoA, etc.
Disclaimer for this Axis Direct Pick of the Week
The review is based on an educated guess made on the basis of available data from open sources expressed for the purpose of knowledge sharing. By no means, you can take it as investment advice or recommendation. Investors/traders should invest money at their own risk.
FAQs on Federal Bank Share Price
The Federal Bank share is targeted to go up in value over time with a combination of economic growth, investor confidence, and speculation.
It depends on your current financial goals and needs but generally speaking, it could be a sound investment choice as part of a well-diversified portfolio.
The future outlook for Federal Bank shares will depend on external factors such as market conditions, industry trends, and global events which can all have an impact on its performance. However, most analysts believe there is potential for long-term growth.
Ultimately you should take this decision after careful consideration and professional advice from an expert if available. Aspects like personal objectives, risk tolerance levels, and timeline requirements must also be taken into account before investing in any stock including Federal Bank’s stocks.
Conclusion
Federal Bank’s financials were strong, and it had a lot of potential for growth. Axis Direct Pick of the Week recommended it as a buy, with a target price of Rs. 121 within 6 months. However, investors should keep in mind the disclaimer and invest at their own risk.
