Federal Bank launches QIP, sets floor price at Rs 133

economictimes.indiatimes.com:

Federal Bank has launched a QIP (qualified institutional placement) issue on Wednesday and fixed Rs 132.59 as the floor price, which is at a marginal discount to current share price. «The Bank, the credit, investment and raising capital committee of the Board has approved the opening of the issue today and adopted the preliminary placement document and the application form in connection with the issue,» the company said in a filing. The floor price of Federal Bank is fixed based on the pricing formula prescribed under Sebi regulations.

The lender has recently reported first quarter earnings with a net profit of Rs 854 crore, rising 42% compared to Rs 601 crore-Q1 profit of the previous year. The net interest income (NII) for the first quarter rose nearly 20% to Rs 1,919 crore. It was Rs 1,605 crore in the same period last year.

Citigroup maintained a 'buy' rating on Federal Bank with a target price of Rs 160 on expectations of net interest margins (NIMs) bottoming out sooner than expected. «Quicker term deposit repricing, scale-up of high-yielding products, and proposed equity infusion should support NIMs in coming quarters. The proposed equity infusion during the quarter should provide growth capital.

Valuations at 1x FY25E book for 1.2- 1.3% RoA, 13-15% ROE, and 16-18% asset growth look inexpensive,» the brokerage said. LKP Securities said Federal Bank has reported mixed 1QFY24 earnings with NPA ratio slightly weak on the back of higher slippages and slower recoveries. The brokerage said it expects NIMs to have likely bottomed out and YOA to improve going forward on the back of favorable loan mix, while reiterating «buy» on the stock.