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Synopsis: Federal Bank shares surged to a record high of Rs 207.80 this week, driven by strong market performance despite broad market corrections. This rise follows robust Q2 earnings, showing a 10.8% increase in net profit to Rs 1,056.7 crore and total income growth to Rs 7,541 crore. Major brokerages have expressed a bullish outlook on the bank, citing improvements in asset quality, strong retail and SME growth, and management's focus on enhancing returns. Key recommendations include Axis Securities' target of Rs 214-222, Centrum Broking's Rs 250 target, and HDFC Securities' Rs 224-240 target over the next few quarters.
Federal Bank shares have captured investor attention after reaching a record high of Rs 207.80 on Thursday. This marks the second peak this week, following a previous high of Rs 207.50 on Monday. This performance reflects growing confidence in the bank's prospects amid a broader market correction. The shares saw a significant surge in trading volume with a turnover of Rs 3.09 crore on the Bombay Stock Exchange (BSE) as total market capitalization reached Rs 50,300 crore.
Key to this impressive market activity was the bank's strong Q2 FY25 results, which revealed a 10.8% rise in net profit to Rs 1,056.7 crore compared to Rs 954 crore a year ago. Total income also increased, driven by higher interest income, reaching Rs 7,541 crore. Notably, the bank's asset quality showed resilience, with gross non-performing assets (GNPA) improving to 2.09%. Retail and corporate loan portfolios grew by 17.24% and 10.48%, respectively.
Brokerages maintain a positive stance, with Axis Securities setting a target range of Rs 214-222, supported by technical indicators such as the bank’s medium-term rising channel. Centrum Broking, with a target price of Rs 250, emphasized expected growth in return metrics and asset quality management as key factors driving optimism. Nuvama and HDFC Securities have also projected targets above Rs 220 based on expected improvements in efficiency, pricing power, and asset quality maintenance.
Investors may find Federal Bank an attractive option due to steady growth prospects, including improved profitability and a consistent focus on managing risks, making it a solid addition to long-term portfolios.
Disclaimer: The above article and views are based on broker reports and market analysis. Investors should perform their own due diligence or consult financial advisors before making any investment decisions.
