Federal Bank shares approach record high ahead of Q3 earnings, here's what to expect

Shares of Federal Bank rose over 5% ahead of the private lender's Q3 earnings set to be announced today. Federal Bank shares gained over 5% to Rs 261.20 on Friday against the previous close of Rs 246.90. With today's rally, the stock has approached record high of Rs 271 reached on December 22, 2025. Market cap of the bank stood at Rs 63,822 crore. Total 6.31 lakh shares of the bank changed hands amounting to a turnover of Rs 16.20 crore.

Rekha Rakesh Jhunjhunwala, wife of late investor Rakesh Jhunjhunwala, held 5.90 crore shares or 2.42 per cent stake in the private lender at the end of December 2025 quarter.

In terms of technicals, the relative strength index (RSI) of the stock stands at 32.7, signaling the stock is trading neither in the overbought nor in the oversold zone. Federal Bank shares are trading higher than the 5 day, 50 day, 100 day, 200 day but lower than the 20 day and 30 day moving averages.

Q3 Earnings Preview 

The Kerala-based bank may report a 5.7% rise in net profit to Rs 1009.3 crore in Q3 against profit of Rs 955.4 crore in the year ago period. Net interest income (NII) is seen at Rs 2525.5 crore in the last quarter rising 4% on a year on year basis, according to brokerage Systematix. The brokerage has a price target of Rs 275 on the banking stock. 

Operating profit is expected at Rs 1661.3 crore  in Q3 against Rs 1569.5 crore on a year-on-year basis. 

The brokerage expects QoQ advances growth to be lower than the industry growth. Sequentially, fee income and other income is to be broadly stable.

Operating expenditure is expected to be in control with sequentially stable employee and other operating expenses.

Systematix said slippages are expected to decrease sequentially with provisions also expected to be lower sequentially.

Another brokerage Elara Capital expects steady business momentum with 3-4% QoQ loan growth and 2-3% deposit growth.  Trajectory on NIMs will define NII outcomes, the brokerage said adding that it expects a marginal rise in NIMs. 

It expects asset quality to remain steady with no lumpy slippages and no major one-off impacts. Investors should watch for management commentary on deposit side challenges, growth momentum and Return on Assets (ROA) trajectory. 

The bank may report a 7.1% rise in net profit to Rs 10,234 crore in Q3 against profit of Rs 955.4 crore in the year ago period. Net interest income (NII) is seen rising 7.1% to Rs 2605.1 crore in the last quarter on a year on year basis, according to brokerage Elara Capital. The brokerage has a price target of Rs 250 on the banking stock.

Q2 Earnings 

In the second quarter of current fiscal, net profit fell 9.6 per cent year-on-year (Y-o-Y) to Rs 955 crore due to higher provisions for unsecured loans.
 
Net Interest income rose 5.4 per cent Y-o-Y to Rs 2,495 crore, with growth in net advances remaining in single digit at 6.23 per cent. However, net interest margins slipped to 3.06 per cent compared with 3.12 per cent in Q2FY25, while on a sequential basis, the interest margin expanded by 12 basis points.