If you’re keeping an eye on the stock market, here’s a piece of news that might pique your interest! According to a recent report by brokerage firm Nomura, Federal Bank’s shares could see a significant 25% increase in the next year. Nomura has labeled this private sector bank as an “undervalued franchise,” moving ahead in high gear.
🔍 Nomura’s Report Highlights:
- Stock Price Target: 🎯 Nomura has set a 12-month stock price target of ₹190 for Federal Bank, indicating a potential 25% increase from its current market price.
- Recent Stock Performance: 📊 Federal Bank’s shares closed at ₹154.10 on Monday, marking a 3.60% increase. The shares have already risen by 11% in 2023.
🌐 Nomura’s Expectations for Federal Bank:
- Operating Profit Growth: 💹 Nomura anticipates that the bank will successfully increase its pre-provisioning operating profit by 22% during the fiscal years 2024-2026.
👨💼 Leadership Transition Ahead:
- CEO Retirement: 🔄 MD and CEO Shyam Srinivasan, leading the bank since 2010, is set to retire in September 2024. Nomura believes this is a key development to watch in the near term. However, they assert that the bank’s second-tier management is well-prepared for this transition.
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📊 Nomura’s Valuation of Federal Bank:
- Price-to-Book-Value: 📚 The brokerage firm evaluates Federal Bank at 1.2 times its December-2025 price-to-book-value, with its subsidiaries contributing ₹8 per share.
- FedBank Financial Services IPO: 🚀 Recently listed in the stock markets, FedFina’s IPO size was ₹600 crores.
📣 Srinivasan’s Outlook:
During the 19th edition of the India Business Leader Awards (IBLA), Srinivasan expressed optimism, noting the potential for significant bullish trends in the next four to six months, particularly in the calendar year 2024. Amidst slow global economic growth, India appears as a shining beacon.
🔮 What’s Next?
Stay tuned as we head towards 2024, where all signs point towards an uptick in the market, with Federal Bank potentially leading the charge. Keep an eye on these developments for a promising start to the next fiscal year
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