Even as the Indian stock market traded with heavy losses during Monday’s session on January 19, Federal Bank share price maintained its momentum for the second day, gaining another 3% in early trade to hit the day’s high of ₹277.90 on NSE. The stock rose as brokerages remained upbeat following the bank’s December quarter results, which beat their estimates.
JM Financial said the bank delivered a strong set of numbers in 3QFY26, with PAT growth of 9% year-on-year (YoY) and quarter-on-quarter (QoQ), driven by healthy NII growth, an improvement in asset quality, and a sharp rise in core fee income.
Similarly, Centrum Broking highlighted the bank’s strong performance, noting that it posted healthy growth across both assets and liabilities, along with a recovery in NIMs. The improvement in margins was driven by better LDR (still comfortable at the mid-80s), balance-sheet liquidity utilisation, and asset mix, with an increasing share of medium-yield assets.
Another domestic brokerage firm, Motilal Oswal, stated that Federal Bank reported a robust quarter, outperforming Street expectations across key metrics. It said NIMs came in ahead of expectations, supported by a decline in the cost of funds and improved growth in medium-yield segments.
Brokerages see Federal Bank share price hitting ₹310
According to Centrum Broking estimates, Federal Bank is expected to report a 25% earnings CAGR over FY26–28E, led by stable NIMs, improving CTI, and asset quality. “In this context, we upgrade our valuation multiple to 1.5x APBV from 1.3x earlier, resulting in a revised target price of ₹305,” Centrum said.
JM Financial said the Federal Bank continues to execute strongly across its strategic priorities—particularly in margin improvement, CASA accretion, and fee income diversification—while maintaining robust asset quality.
The brokerage expects the bank’s structurally stronger balance sheet and granular deposit franchise to sustain earnings resilience, estimating RoA and RoE of 1.1% and 11.7%, respectively, over FY26E–27E.
Thus, it upgraded the rating to ‘Add’ and raised Federal Bank share price target to ₹290 apiece, valuing the core bank at 1.4x FY28E BVPS.
Motilal Oswal raised its PAT estimates by 2.5% and 2.3% for FY26 and FY27, respectively, factoring in NIM expansion and better loan growth, partly offset by slightly higher provisions. It estimates Federal Bank to deliver FY27E RoA and RoE of 1.26% and 12.2%, and it retained its ‘Buy’ rating on the stock with a target price of ₹310 apiece.
Federal Bank Q3 2025 performance
The bank’s net profit during the December quarter stood at ₹1,041.21 crore, up 9% YoY, supported by stronger core income and operating leverage.
Its net interest income (NII), which represents the difference between the interest earned from loans and the interest paid to depositors, stood at ₹881 crore in Q3, up from ₹869 crore in the corresponding quarter of the previous year.
The Net Interest Margin (NIM) expanded 12 bps QoQ to 3.18%, supported by improvements in liability mix and asset repricing. On the operating front, the bank’s pre-provision operating profit rose to ₹1,729 crore from ₹1,559 crore year-on-year, marking a growth of 10.2% YoY, according to the bank’s Q3 earnings’ filing.
In terms of asset quality, the bank’s gross non-performing assets (NPAs) declined by 23 basis points year-on-year to 1.72%, while net NPAs fell by 7 basis points year-on-year to 0.42%, both declining to decadal lows.
However, overall provisions, excluding tax, increased to ₹332 crore during the quarter from ₹292 crore a year ago. Slippages at the end of the December quarter improved to ₹443 crore from ₹584 crore during the second quarter last year.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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