Federal Bank Share Price Forecast, Target & Stoploss
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Federal Bank Share Price Forecast Introduction
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Share price forecast is little tough work especially when you’re doing it for a huge firm like the federal Bank. But Here it needs to be said that when we are talking about federal banks hare price forecast we aren’t talking about its target price in 2019 or 2020, we will be announcing its future share price like after 5-8 years or so.
Federal Bank has long working experience, It was established in 1949, just after the implementation of the Banking Regulations Act 1949.
Do You Know what’s best with these banks with long working experience, whether it be the federal bank or SBI etc.?
Well, these banks know how to tackle different market cycles and how to survive when everything is falling apart. The great crisis of 2008 had devastated the huge number of firms, which survived from that learned a lot.
It was the Great crisis of 2008 which devastated Suzlon Energy share, It has fallen form RS. 459 to Rs. 4.35(Now), So you can imagine how tough was to survive in those days.
OK SO moving ahead, here we will be analyzing multi factors which will help us in forecasting the future share price of federal bank. The first of them would be its share price analysis.
Fundamental and technical data will be calculated & analyzed to see if the firm is worth investing or not! Because in this article we are trying to calculate the ‘Federal Bank Share Price Forecast’ we won’t be going too deep in the analysis. If you want it more thorough, comment below we will come up with another article on Federal Bank share analysis only.
After the analysis, we would be discussing its share price history which also keeps equal weight in determining the federal bank share price forecast. How have you performed in the past 5-10 years surely determines how you are going to do for the next 5 years.
Likewise, we will be discussing a few more factors, after which I will disclose the main part of this article ‘Federal Bank Share Price Forecast’.
It’s going to be a little longer than you expected, take your coffee mug and sit tight. Let’s start our quest to determine federal banks future share price target
Federal Bank Share Analysis
The first thing that helps in the Federal Bank share price Forecast is its stock analysis. Below are both kinds of analysis that you were searching for here.
Federal Bank/Share Fundamental Analysis
Established in 1949, It was named Federal Bank Limited. During its long service to the customers, it has achieved a lot in and outside the country.
Between 1963-70, the federal bank acquired Chalakudy Public Bank, Cochin Union Bank, Alleppey Bank, St. George Union bank and Marthandam Commercial Bank.
In 1994, the Federal bank announced its IPO and became a Scheduled Commercial Bank. It has grown multifold since its establishment.
In 2008 and 2016 it established two overseas representative offices in Abu Dhabi and UAE respectively.
Looking at its rapid expansion policy, it sure looks like one multibagger stock. Does it not.?
Moving ahead, Federal bank manages huge corpora of more than 8 million customers out of which 1.2 million are NRI’s. It also managed a large network of remittance partners across the world.
Federal manages India’s 15% inward remittances, No doubt it is the ‘must buy’ in the billionaire’s list. Rakesh Jhunjhunwala holds a huge chunk of share in Federal bank.
Federal Bank has a remittance arrangement with more than 115 Banks and exchange companies across the globe.
Not only this, Federal Bank shares are listed on NSE (National Stock Exchange), BSE(Bombay Stock Exchange) and London Stock Exchange. It has also booked a branch in India’s first International Financial Service Centre (IFSC) at GIFT City, Gujarat.
Overall the fundamentals of the bank look fine, it has a huge number of customers to manage, huge bunch of branches across the globe, long working experience and managing huge number Inward remittance.
Below are its board of members;-
• Mr. Dilip Gena Sadarangani – Chairman
• Mr. Shyam Srinivasan – Managing Director & CEO
• Mr. Nilesh Shivji Vikamsey – Director
• Smt. Grace Elizabeth Koshie – Director
• Smt. Shubhalakshmi Panse – Director
• Mr. C Balagopal – Director
• Mr. A P Hota – Director
• Mr. Balakrishnan Krishnamurthy – Director
• Mr. Ashutosh Khajuria – Executive Director
Technical Analysis of Federal Bank Share
Starting with its Market cap, Federal Bank has a huge market of Rs. 18,939 crores, which helps the banking officials to work efficiently. A huge market cap helps the firm to make big decisions.
Market capitalization gives an insight into the company’s working and belief of Investors on the firm. A huge market cap means public goodwill but low m-cap indicates otherwise.
Also, Large-cap stocks tend to be less volatile in negative market conditions.
Federal Bank has a PE Ratio of 13.87, which is among the ideal ratios. Indicating less volatility but also little slow growth these days. PE ratio which is the price to earnings ratio indicates the expected price of a share based on its earnings.
When the company experiences rising PE Ratio (Price to earnings), it’s market value per share also goes up. High PE indicates positive future growth and investors are willing to pay more per share. The ideal PE ratio ranges between 15-28.
It needs to be said here that few investors give too much importance to PE ratio, its wrong approach. Though PE ratio is one good indicator you should never invest based on this only. Some firms are doing awesome but they don’t have an ideal PE ratio.
Federal Bank has an EPS ratio of 6.87. Earnings per share ratio (EPS) indicates the amount of a company’s net income that is available for payment to the company’s common shareholders.
Ok, so Below are some more factors that we have considered to determine the ‘Federal bank share price forecast’:-
Debt to asset ratio
Price to Cash Flow
PEG Ratio ( Price to earnings to growth ratio)
Asset turnover ratio
Current ratio:- It also tests the company’s financial strength. And when you are analyzing a bank share this ratio gets more important.
Ok, so these were other 8 factors that we calculated and tested the federal bank share. Federal Bank stands strong on all these factors, some of them were little below the average but others were awesome.
Like, it has managed its NPA book on average trend. It has a thick loan book which generates huge revenue for the bank.
Overall the bank looks one multibagger stock to buy now. According to most of the brokerage firms, Federal bank stock is a multibagger stock.
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Federal Bank Share Price History
The second factor which is too important for the Share Forecast is the Federal Bank Share History.
Historically the federal bank share price has done marvelous, maybe because of that expert of federal bank stock is expecting its growth to increase multifold in the future.
Federal Bank had issued its IPO in 1994. Around July 2001 Federal Bank share was trading around Rs. 1.20 and now It has reached Rs. 110. Look at the spread. Though it a long tenure but I just wanna show you its potential.
From June 2001 to 2010, the Federal Bank share shifted from Rs. 1.20 to Rs. 30 around thirty-fold increase right. And then from 2010 to 2019, it has grown to Rs. 110.
If you compare it’s today’s price with the initial price you will find it has unmatchable speed and potential.
The historical price of federal bank suggests that if you stay for the long term this can make a humongous fortune for its investors.
Federal Bank Quarterly results
Quarterly results are also very important while determining the Federal Bank Share Price Forecast.
Federal Bank’s quarterly results have been announced and it is marvelous. Who doesn’t want his/her invested firm growing faster than everyone else was expecting.
So, Federal bank’s profit for the first quarter grew by 46.2 percent year-on-year to Rs. 384.2 crore despite provisions remained elevated and asset quality deterioration. Growing other income and operating profit has boosted earnings.
Compared to the last quarter, this quarter has grown by Rs. 122 crores, last quarter it was Rs. 262.7 crores.
Net interest income, which is the difference between interest earned and interest paid, has increased to 17.8 percent YoY to Rs. 1,1542 crore.
As we talked earlier also this quarter’s numbers are better than expected, CNBC had calculated it to its nearest which was Rs. 358.5 crore and NII Rs. 1,135 core for the quarter.
Gross NPA (Non-Performing Assets) as a percentage of gross advances increased to 2.99 percent, from 2.92 percent in the previous quarter and net NPAs to are higher than expected at 1.49% against 1.48 sequentially.
Gross slippages rose to Rs. 415 crores for the quarter ended June are higher compared to Rs. 256 crores for the previous quarter.
Though the results are more than expected but it would have been much better if the sectors like Infra, roads, NBFCs weren’t in crisis-like-situation. As soon as these sectors get relief Federal bank as the best chance to grow even faster.
Federal Bank reported provisions for the bad debt at Rs.192 crore for the quarter ended June, against Rs. 177.8 crore in March and Rs. 199 Crores in June last year same quarter.
Non-Interest Income in Q1 rose up 44.5 percent to Rs. 391 crores. Operating profit also shot up 30 percent year-on-year to Rs. 783 crore.
Talking about the overall quarterly results, the federal bank has performed better than expected. And not only in this quartet but every other last quarter!
It gets easy to determine the Federal Bank Share Price forecast when the stock is performing at its level best. We have analyzed federal bank share historical prices, its fundamental and technical analysis have been done and now its time to move into its future share price determination.
Federal Bank Share Price Forecast and Target
This section surely deals with the federal bank share forecast and target but I would advise you to keep your imaginary-expectation behind while reading this.
In all major factors and analysis Federal Bank has done marvelous, With PAT, deposits, and advances growing respectively 46 percent, 19 percent and 18 percent YoY. However, in the past few quarters, the asset quality slightly has gone down with GNPA increasing 7bps sequentially to 2.99 percent and slippages came at 1.5 percent ( of the loan book).
Analysts have retained their positive ratings on the federal bank. Seeing the strong business growth prospects, bank’s working potential and its rapid expansion policy make the hottest buy of 2019.
The Federal Bank has reported an earnings of 46% YoY, with the support of 24% YoY revenue growth and a 4 percent decline in provisioning. Management is also positive in its working.
They are intended to accelerate growth in the higher-yielding retail book and with the re-pricing benefits from the existing book, margins are expected to step up.
Management announced with stable or stepped-up margins, they expect a 22-23 percent earnings CAGR over the next two years.
For the next one year target, analysts have fixed the bar at Buy it at the current price and in the next one-year federal bank share price is going to cross Rs. 130-135.
Ok, so this is the target for the next one year. Let’s see it for the next 5-8 years.
Though it’s a tough work to do in a situation when market conditions are not in favor. So, Federal bank share price hs rose from rs. 1.20 in 2001 to Rs. 30 in 2010 which is more than 30 fold increase and from then it has reached Rs. 110 in 2019.
Looking at this fast pace growth in the stock price of the federal bank share, Analysts say that Federal bank might achieve the benchmark price of Rs. 650-730 in the next 5-8 years. Which is a huge right.?
It is awesome. A must buy from my side. Federal bank is the fastest growing bank in the country it has the best & longest working experience, huge market cap, humongous world exposure, etc. Are just a few factors that are favoring and pushing the stock to reach that level.
So, this was all from my side. I hope now you have a clear view of the federal bank share price forecast. You have a target for this year and for the next 5-8 years. Though this might budge according to companies’ performance and market conditions it won’t be very different from these numbers.
The federal bank has a great track record and working experience which makes it the hottest stocks right now.
We have seen federal bank share historical prices and its fundamental and technical analysis which looks great and awesome. It has the power to give multifold results in just a few years. Things that might restrict this goal are market conditions, global market regulations, and movement, What happens to Brexit? factors affecting share prices etc. You gotta watch these also.
Rest factors are very much in favor of the stock price.
Rakesh Jhunjhunwala has a big stake in Federal Bank, which makes this stock the darling stock of the D-street. This stock is one of billionaire’s choice. You must buy this if You wanna follow billionaire’s path.
Though it’s not a compulsion to invest in it, you can or you can’t. But I like to think of it as following billionaire’s choice.
This was all in this article. Feel free to ask your confusion or query in the comment section and don’t forget to share it with your friends and colleagues on WhatsApp, facebook, twitter, etc.
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Disclaimer: The views and investment tips expressed by investment experts on Moneycompulsion.com are his own and not that of the website or its management. Moneycompulsion.com advises users to check with certified experts before taking any investment decisions.