Federal Bank stock gets 53% price target hike; Nomura says this
Federal Bank's asset quality remained strong, better than its mid-tier peers, said the brokerage.
- May 4, 2026,
- Updated May 4, 2026 12:51 PM IST
Shares of Federal Bank have received an upgrade from global brokerage Nomura post the private sector lender's strong Q4 earnings. Nomura changed its stance from 'Neutral' to 'Buy' with a price target of Rs 330. The fresh price target is 53% higher to the previous target price of Rs 215.
The brokerage upgraded the stock from 'Neutral' to 'Buy' on strong Q4 FY26 earnings, with consistent execution supporting upgrade
The brokerage raised its EPS estimates by 9%/13% for FY27/FY28, led by higher fee income and lower operating expenditure.
It expects 17% EPS CAGR over FY26-28F, with Return on Assets (ROA)/ Return on Equity (ROE) at 1.3%/12% by FY28.
The brokerage said the lender's asset quality remained strong, better than its mid-tier peers. It beat estimates on core Pre-provision Operating Profit (PPOP) beat, led by fee income and controlled costs. The bank posted a healthy loan growth in focus segments, with stable asset quality.
Federal Bank reported a 22 percent rise in consolidated net profit led by stronger core earnings.
The Kochi-based lender reported a net profit of Rs 1,259.1 crore in Q4FY26 compared to Rs 1,030.2 crore in the prior corresponding period.
Net interest income (NII) rose 56% to Rs 3,173 crore for the March 2026 quarter compared to Rs 2,377 crore in the previous corresponding quarter.
Brokerage Anand Rathi has a price target of Rs 349 on the banking stock. The brokerage remains bullish due to strong credit growth, an improving CASA (Current Account Savings Account) ratio, and healthy asset quality of the lender.
Credit growth rose to 12.7% year-over-year in Q4FY26, led by higher-yielding segments like gold loans (up 26%) and commercial vehicles (up 25%), said Anand Rathi.
Federal Bank's asset quality was improved with the net non-performing asset (NPA) ratio in Q4 falling to 0.2 percent from 0.42 percent in Q3FY26. When adjusted for one-off, the ratio came in at 0.37 percent.
In Q4, net NPA ratio stood at 0.44 percent. The gross NPA ratio came in at 1.62 percent compared to 1.84 percent in Q4FY25.
"We have made significant progress in restructuring our liabilities by focusing on retail mobilisation and reducing reliance on high-value deposits, which is reflected in our optimised cost of funds," KVS Manian, Managing Director & CEO, said in a press statement.
The bank's return on assets was at 1.36 percent for the March quarter, as compared to 1.24 percent in Q4 FY25.
In the current session, the banking stock was trading 0.51% higher at Rs 288.45 against the previous close of Rs 287. Market cap of the bank stood at Rs 71,029 crore.
Shares of Federal Bank have received an upgrade from global brokerage Nomura post the private sector lender's strong Q4 earnings. Nomura changed its stance from 'Neutral' to 'Buy' with a price target of Rs 330. The fresh price target is 53% higher to the previous target price of Rs 215.
The brokerage upgraded the stock from 'Neutral' to 'Buy' on strong Q4 FY26 earnings, with consistent execution supporting upgrade
The brokerage raised its EPS estimates by 9%/13% for FY27/FY28, led by higher fee income and lower operating expenditure.
It expects 17% EPS CAGR over FY26-28F, with Return on Assets (ROA)/ Return on Equity (ROE) at 1.3%/12% by FY28.
The brokerage said the lender's asset quality remained strong, better than its mid-tier peers. It beat estimates on core Pre-provision Operating Profit (PPOP) beat, led by fee income and controlled costs. The bank posted a healthy loan growth in focus segments, with stable asset quality.
Federal Bank reported a 22 percent rise in consolidated net profit led by stronger core earnings.
The Kochi-based lender reported a net profit of Rs 1,259.1 crore in Q4FY26 compared to Rs 1,030.2 crore in the prior corresponding period.
Net interest income (NII) rose 56% to Rs 3,173 crore for the March 2026 quarter compared to Rs 2,377 crore in the previous corresponding quarter.
Brokerage Anand Rathi has a price target of Rs 349 on the banking stock. The brokerage remains bullish due to strong credit growth, an improving CASA (Current Account Savings Account) ratio, and healthy asset quality of the lender.
Credit growth rose to 12.7% year-over-year in Q4FY26, led by higher-yielding segments like gold loans (up 26%) and commercial vehicles (up 25%), said Anand Rathi.
Federal Bank's asset quality was improved with the net non-performing asset (NPA) ratio in Q4 falling to 0.2 percent from 0.42 percent in Q3FY26. When adjusted for one-off, the ratio came in at 0.37 percent.
In Q4, net NPA ratio stood at 0.44 percent. The gross NPA ratio came in at 1.62 percent compared to 1.84 percent in Q4FY25.
"We have made significant progress in restructuring our liabilities by focusing on retail mobilisation and reducing reliance on high-value deposits, which is reflected in our optimised cost of funds," KVS Manian, Managing Director & CEO, said in a press statement.
The bank's return on assets was at 1.36 percent for the March quarter, as compared to 1.24 percent in Q4 FY25.
In the current session, the banking stock was trading 0.51% higher at Rs 288.45 against the previous close of Rs 287. Market cap of the bank stood at Rs 71,029 crore.