Every Monday, the Axis Direct comes up with the weekly recommendations known as Axis Direct Pick of the week. These weekly recommendations are backed up by in-depth research from Axis Direct. Because of their very efficient research team, it is often seen that these weekly recommendations perform very well and often outperform the benchmark index. Let us have a detailed look into the Axis Direct Pick of the week for the week starting 4th September 2017. Here are the details of Axis Direct Pick of the week.
Axis Direct Pick of the Week –
Here, is the details of the Axis direct pick of the week, that is Federal Bank.
Federal Bank Fundamental Analysis
This week, starting from 04.09.17., the Axis Direct has picked federal banks on the basis of fundamental analysis. You can expect to perform within a 6 month period and reach the target by that time.
Now, let’s see the fundamental details of the bank. Federal Bank’s price as of 01.09.17. was Rs 110. Within the stipulated timeframe, the stock can expect to go up 10% reaching the target of Rs 121. Federal Bank has a market capitalization of Rs 21,421 crores. The research team has recommended buying the stock. With the investment horizon of 6 months, you can expect the stock to give a 10% return on investment which can be annualized to 20% ROI.
The Rationale behind the Recommendation
- The latest annual audit report showed 15.6% YOY (year on year) growth.
- Robust income growth at 38% YOY.
- 27% increase in core fees and treasury gains.
- Provisions for the quarter went up to Rs 236.4 crores which show a 40.3% gain on year on year basis.
- GNPA ratio improved by 50 bps YOY. The GNPA came down to 2.42% in fiscal 18 compared to 2.92% in fiscal 17.
- The new corporate banking team of the Federal Bank expects to keep the present momentum growing. And you can expect to give a boost to the business in the corporate banking sector.
- Total growth of 18% CAGR (compounded annual growth rate). You can expect to be maintained all through fiscal 17 to fiscal 19 backed by overall growth in corporate, SME and retail banking.
- The dynamic management of the Federal Bank has focused on containing slippage from corporate books, reduce the cost of borrowing and growth in lending in both the corporate and retail sectors.
- Now, look at the picture below. Here, you can see the fundamental details like PAT, RoE, RoA, etc.
Disclaimer – The review is based on an educated guess made on the basis of available data from open source 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.