HDFC Sec in a Report Released to institutional Investors on Federal Bank said,
Federal Bank (FB) corrected 28% in the last 3 months on increasingly tough macro environment. Large corp assets of Rs 3-4bn remain under stress, while slippages in retail and SME segment are under check. Restructured assets additions can be ~Rs 2bn in 2QFY14. Loan growth in retail and SME is strong. NIMs guidance for FY14 was kept at 3.20-3.25%. MTM losses of Rs 200-400mn foreseeable in 2QFY14
Our earnings estimates fall by ~11/9% for FY14/15E given marginal NIM compression, lower growth and higher slippages, credit cost. Maintain BUY with a revised Target Price of Rs 409 (1x FY15E ABV) vs. Rs 506 (1.2x FY15E ABV) earlier.
My Views
BUY the Stock on Correction as the market will definitely correct from current levels of 19,900 on SENSEX
