Federal Bank Q3FY19: Valuations attractive; Buy

LKP Research | Jan. 17, 2019, 12:11 p.m.

Valuation

We see PAT to grow at 30% CAGR over the next 2 yrs FY19-21E. Over the years, the bank has strengthened its balance-sheet, gained market share in good quality rated assets, made sizeable digital investments in-line with larger peers and is growing assets at much higher pace than industry average. We are optmistc about the future growth outlook of the bank. In our view, current valuatons of the bank offer decent upside. It is trading at 1.3x and 1.1x FY20E & FY21E ABV resp. Retain BUY with TP of 121 giving upside of 38% from current levels.



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