FEDERALBNK

Federal Bank Ltd. demonstrates robust operational resilience, reporting an 11.6% year on year growth in gross advances driven by strong commercial vehicle and SME lending. Despite a 125 bps rate cut, the bank expanded its Net Interest Margin to 3.18% and improved its CASA ratio to 32.1%, underpinned by a 15% rise in low-cost deposits. Asset quality remains a highlight, with Gross NPA and Net NPA declining to 1.7% and 0.4% respectively, while the Provision Coverage Ratio strengthened to 75.1%. Profitability is solid, with PAT growing 9% to Rs. 1,041 crore. The strategic capital infusion from Blackstone further bolsters the balance sheet, enabling a shift toward mid-yield assets. However, given the stock's elevated valuation, While the bank is well-positioned for sustained growth with projected loan expansion in the high teens, current prices limit immediate upside, suggesting investors wait for better entry points despite the strong fundamentals.