Federal Bank's shares reached a 52-week high at Rs 151.9 on Tuesday, propelled by a substantial 23% year-on-year increase in total deposits and a 20% surge in gross advances for the second quarter of fiscal year 2024. The bank's stock has seen a modest 8.71% rise this year.
The bank's retail and wholesale credit books have shown significant expansion, with respective growth rates of 22% and 17%. It has also reported an increase in customer and term deposits. The Current Account Savings Account (CASA) ratio, a key indicator of a bank's financial health, has dipped to 31.1%.
Yet, Federal Bank remains a prominent player in the banking industry, as noted in InvestingPro Tips, which also highlights the fact that stockholders receive high returns on book equity.
Motilal Oswal Financial Services remains optimistic about Federal Bank's future growth. Despite concerns around net interest income due to rising deposit costs, the financial services company anticipates positive growth for the bank. This optimism is supported by InvestingPro's data, which shows the bank's P/E ratio at a low 3.21, indicating a potential undervaluation.
In light of these insights, two InvestingPro Tips stand out: Federal Bank is trading at a low P/E ratio relative to near-term earnings growth, and it has shown a strong return over the last three months.
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