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Attractive valuation and other reasons why Federal Bank is stock pick of the week

Attractive valuation and other reasons why Federal Bank is stock pick of the week
Attractive valuation and other reasons why Federal Bank is stock pick of the week
Increased Covid provisioning and improved efficiencies should help it navigate upcoming turbulence.

Synopsis

Federal Bank’s gross NPA fell to 2.84% from 2.96% q-o-q and its net NPA improved to 0.99% from 1.22% q-o-q. Attractive valuations especially among the mid-cap banks is the other reason that has made it a favourite of analysts.

Federal Bank saw a net profit fall of 26% y-o-y and 23% q-o-q in the second quarter of 2020-21. However, analysts are getting bullish on the counter. Steady improvement in operational efficiencies is one of the several reasons behind this development. The bank's fee income is now close to the pre Covid levels and could report a jump of 74% q-o-q. Despite the fall in interest rate, the bank continues to see a good deposit inflow which was up by
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