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| 12/13/2012 9:00 PM Thursday

Federal Bank

I am holding 150 shares of Federal Bank purchased at an average price of Rs 389 per share. Should I hold or sell it off.
Anup Saxena, Via email

EXIT

BSE/NSE Code

500469/FEDERALBANK

Face Value

Rs 10

CMP

Rs 463

52-Week High/Low

Rs 571/Rs 322

Current Profit/(Loss)

19.02 per cent





The banking sector has been the best performing sector on the bourses so far this year. Its performance is set to improve further with the Banking Regulations Amendment Act bringing in many changes which will be in favour of banking companies. Add to this the recently passed The Enforcement of Security Interest & Recovery of Debts Laws (Amendment) Bill, 2011 and you have a sure shot winner in the banking sector. Coming to your choice of Federal Bank, lets start by telling you about its entrenchment. Federal Bank operates through a network of 1010 branches and 1100 ATMs (as of 30th September 2012). It has been able to strengthen its business well with total deposits having gone up to Rs 48397 crore in FY12 as against Rs 43015 in FY11.

Its recent performance (Q2FY13) has been quite good. The topline has witnessed a growth of 11.54 per cent on a YoY basis to stand at Rs 1525.63 crore as against Rs 1367.83 crore in Q2FY12. The bottomline witnessed a growth of 12.52 per cent on a YoY basis to stand at Rs 215 crore as against Rs 191.16 crore in Q2FY13. The bank has witnessed a steady credit growth across categories including Retail Advances, SME and Corporate Advances for Q2FY13 on a YoY basis. However the NPA’s have witnessed an uptrend. The Gross NPAs stand at Rs 1435 crore for Q2FY13 as against Rs 1250 crore for Q2FY12. Its Net NPAs stand at 0.68 per cent in Q2FY13 as against 0.58 per cent in Q2FY12. On the valuation front the stock trades at a price to book value of 1.56 times. The dividend yield on it is around 1.87 per cent. With what we have mentioned about this sector in the beginning we suggest, you hold on to the stock to garner better returns going forward.

 

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