Federal Bank tanks as hopes of Kotak top exec joining fade
Federal Bank fell 5.3% on Tuesday as the elevation of KVS Manian at Kotak Mahindra Bank dashed expectations of the senior banker joining the Kerala-based lender. The stock had risen recently on reports that Manian is one of the top candidates for Federal Bank's next chief.
«We believe any stock run-up attributed to this news flow should come off,» said brokerage Emkay Global's analysts Anand Dama, Kunaal N, and Marazbaan Dastur in a client note. «This raised hopes for the replacement… with a pedigreed external candidate from a large bank as MD.»
The RBI had turned down Federal Bank's request to let the current MD and CEO, Shyam Srinivasan, extend his term, which comes to an end in September.
«The stock may stay under pressure until the bank announces a candidate to take over as the next CEO,» said Veer Trivedi, research analyst at Samco Securities, which has a buy rating on the stock and remains one of its top picks.
JP Morgan is 'overweight' with a target of ₹175, whereas Citi has a 'sell' rating with a target of ₹135.
LKP Securities has a 12-month price target of ₹170. The price correction provides valuation comfort as the bank's fundamentals are resilient, said Ajit Kabi, research analyst at LKP Securities. The stock closed at ₹154.8 on Tuesday.
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