This mid-cap bank stock will offer a potential gain of 36%, a final dividend of 90% declared

1. Federal Bank Stock Outlook

The current market price of the stock is 95.25 at the time of writing the story. The stock hit a 52-week high at 107 and a 52-week low at 77.50. The title gave a return of 11.49% in one year. According to Oswal, if you buy the stock today at Rs 95, it has the potential to give you a yield of 36% with a target price of Rs 130.

Current market price 95.25
Target price 130
Potential gain 36%
52 week high 107 rupees
52 week low Rs 77.50
1 year return 11.49%
2. The Federal Bank will soon pay 90% dividends

2. The Federal Bank will soon pay 90% dividends

The leading private bank announced a 90% stock dividend on May 6, 2022 amounting to Rs 1.8 per share. According to the BSE filing, “The Board of Directors of the Bank has recommended payment of final dividend @ Rs 1.80 per share of par value Rs. 2 each (90%) for the financial year 2021-22 subject to shareholder approval at the next annual general meeting of the Bank.

It has a good dividend history and has consistently declared dividends over the past 5 years. The dividend yield is 0.74%

3. Personal credit growth

3. Personal credit growth

According to the bank’s internal classification, retail credit grew 16.7% year-on-year while wholesale book posted 15.8% year-on-year growth. Thus, the share of retail in the mix improved further, from 54% in 1QFY22 to 55% in 1QFY23. The total deposit base increased by 8.2% over one year (+1% over one quarter) to reach INR 1.83 t. Total customer deposits increased 9.1% YoY (+0.8% QoQ) while CASA increased 15% YoY. However, sequentially, it remained flat with marginal growth of 0.6% QoQ. As a result, the CASA ratio decreased by 10 bps QoQ to 36.84%.

Term deposit growth was 6.1% YoY and 1.0% QoQ (vs. 4.4% QoQ in 4Q22). The retail deposit share improved to 94% in 1QFY23 from 93% in 1QFY22. Certificates of deposit increased by 12% year-on-year while interbank deposits fell sharply by around 56% year-on-year.

4. Valuation

4. Valuation

According to Oswal, “Overall, FB saw healthy lead growth, helped by strong growth at the system level. marginal drop to 36.8%. We maintain our BUY rating with a TP of INR 130 (based on 1.2 x FY24E ABV for the main bank + INR 10/share of subsidiaries/JV).”

5. About Banque Fédérale SA

5. About Banque Fédérale SA

The Federal Bank has served the nation since pre-independence times. Incorporated on April 23, 1931 as Travancore Federal Bank Limited, Nedumpuram under the Travancore Companies Regulations 1916, the Bank was renamed The Federal Bank Limited in December 1949, under the management of Late KP, according to its website. website. It has a market capitalization of Rs 20,025 crore.

Disclaimer

Disclaimer

The security was selected in the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.

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