Experts expect Federal Bank share price to rise as much as 38% despite mixed Q1FY24 results; here's why
₹853.74 crore for the first quarter of FY24, registering a strong growth of 42.2 per cent from ₹600.66 crore in the corresponding period last year. Its net interest income (NII) in Q1FY24 rose 19.6 per cent to ₹1,918 crore from ₹1,604.5 crore year-on-year (YoY). Net interest margin (NIM) contracted marginally by 7 basis points to 3.15 per cent from 3.22 per cent in the June quarter last year.
The fee income of the lender rose 21 per cent YoY to ₹535 crore, while its pre-provision operating profit (PPOP) increased 34 per cent YoY to ₹1,302 crore. Read more: Federal Bank Q1 results: Net profit jumps 42% to ₹845 crore; NII rises over 19% YoY Shares of Federal Bank hit their 52-week highs of ₹143.35 on BSE on January 16, 2023. They are now nearly 12 per cent down from their one-year peak level.
Analysts at brokerage firms have retained their previous views on the stock even as they underscored Federal Bank's Q4FY24 numbers were mixed. Brokerage firm Motilal Oswal Financial Services maintained a buy call on the stock with a target price of ₹155, implying a 22 per cent upside potential. The brokerage firm pointed out Federal Bank reported a mixed Q1FY24, with a beat in net earnings and a miss in net interest income (NII).
The earnings beat was driven by higher other income, while the NII miss was due to margin compression. Business growth, though, was healthy, led by traction across segments. The liability franchise remained strong, with a retail deposit mix at about 85 per cent and the CASA (current account and savings account) ratio at about 31.9 per cent.
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