The Federal Bank Limited

Financial Services — Banks - Regional · NSE

₹338.00+₹3.00 (+0.90%)

DalalBaazaar Score

67 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

No individual risk factor stands out on this snapshot.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Nothing on this snapshot stands out as an immediate concern — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

The 60-second version of The Federal Bank Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

The Federal Bank Limited provides various banking and financial services in India. It operates through four segments: Treasury, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations segments.

IndustryBanks - Regional

SectorFinancial Services

Employees16,941

Annual revenue₹16,298 Cr

How does it make money?

Turns over ₹16,298 Cr a year. Of every ₹100 of sales, about ₹27 reaches shareholders as profit. Each of its 16,941 employees supports ₹96.2 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹96.2 lakh

Who are its competitors?

The closest listed comparisons in its industry are HDFC BANK LTD, ICICI BANK LTD., KOTAK MAHINDRA BANK LTD, AXIS BANK LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE13.8%

What is the outlook?

30 analysts covering the stock expect revenue to grow about 16.4% and earnings to grow about 15.9% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+16.4%

Est. earnings growth+15.9%

Analysts30

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +59% while net margin moved -13% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+59%

Margin effect-13%

DalalBaazaar Score

67/ 100

Good

Weighted across six categories. Every point is explained below.

• P/E of 16.5x is within a normal band
✗ P/E is 35% above its own historical median of 12.2x — expensive by its own standards

Quality vs. Valuation

Company Quality

69/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

50/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

16.5x

3Y Median

12.2x

40 monthly readings · mean 13.5x · range 9.5x–21.4x

Sector Median

17.0x

median of 4 sector peers

⚠️Current valuation is approximately 35% above its 3y median of 12.2x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟡Against its sector it is priced broadly in line with the peer median of 17.0x.

vs. its own history

Expensive

12.2x median over 40 months · +35%

vs. sector peers

Fair

17.0x median of 4 peers · -3%

vs. generic bands

Fair

15x–35x

EV/EBITDA

—

PEG

1.48

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on equity is falling
ROE has dropped from 14.3% to 10.9% — each rupee of shareholder capital earns less than it did.

Red Flags

No automated checks triggered

None of the automated financial checks below were triggered on the years of data available. That is not the same as a clean bill of health — see what could not be checked.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The price already assumes success
The stock trades 35% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 14.3% to 10.9%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 12% a year✓ 16.6% CAGR
Latest reported year was 36.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2Return on equity stays above 11%✓ 13.3%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Valuation vs its own median of 12.2x✗ 16.5x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

8 / 10 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 7 neutral · 0 weak

Market Cap

₹83,499 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

16.5x

Fair

Fairly valued against the generic band

P/B Ratio

1.95x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹20.48

Profitable

Profitable on a per-share basis

ROE

13.3%

Moderate

Moderate capital efficiency

ROCE

Not meaningful

N/A for lenders

Banks and NBFCs don't report capital employed the way other businesses do

Debt/Equity

0.77x

Moderate

Moderate leverage

Revenue Growth (YoY)

36.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

45.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.36%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹4,041 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

13.8x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

1.3%

Weak

Assets generate little profit

Operating Margin

44.5%

Good

Healthy core-business profitability

Net Margin

31.4%

Good

Strong bottom-line conversion

Beta (vs Nifty)

0.29

Defensive

Steadier than the market

52W Range Position

78%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

326.9 / 340.7

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

64.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹10,279 Cr	₹12,130 Cr	₹14,248 Cr	₹16,298 Cr	+16.6%
PAT (Net Profit)	₹3,165 Cr	₹3,880 Cr	₹4,159 Cr	₹4,345 Cr	+11.1%
EPS	₹14.85	₹16.55	₹16.8	₹17.48	+5.6%
ROE	14.3%	12.9%	12.0%	10.9%	—
Total Debt	₹25,862 Cr	₹22,309 Cr	₹30,346 Cr	₹30,793 Cr	+6.0%
Free Cash Flow	₹5 Cr	₹6,103 Cr	₹8,046 Cr	₹4,041 Cr	+814.9%

🟢 Revenue has grown at 16.6% a year over 3 years.

🟢 PAT (Net Profit) has grown at 11.1% a year over 3 years.

🟢 EPS has grown at 5.6% a year over 3 years.

🔴 ROE has fallen from 14.3% to 10.9% over 3 years (-3.5 pts).

🔴 Total Debt has grown at 6.0% a year over 3 years.

🟢 Free Cash Flow has grown at 814.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹4.02 L Cr

Total Liabilities

₹3.61 L Cr

Cash & Equivalents

₹34,602 Cr

Operating Cash Flow

₹4,349 Cr

Capex

-₹308 Cr

Shareholding (proxy)

Institutional Holding

60.6%

Insider Holding

10.9%

Corporate Actions

Next Earnings

14 Jan 2027

Dividend Rate

₹1.2

Ex-Dividend Date

14 Aug 2026

Analyst Consensus

Recommendations

20 Buy · 11 Hold · 4 Sell

Target Price (Mean)

₹366.34

+8.4% vs CMP

Target Range

₹284 – ₹430

Peer Comparison

Company	P/E	ROE
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%
KOTAK MAHINDRA BANK LTD	21.9x	11.2%
AXIS BANK LIMITED	14.5x	13.4%

Recent News

2 positive1 mixed3 general

Federal Bank Q2 Results: Net Profit Jumps 45% to Record ₹1,386 Crore; NII Rises 26%

India Infoline, 16 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Federal Bank sets Aug 21 AGM; seeks approval for ₹10,000 Cr bond issuance

scanx.trade, 15 Oct

F&O Strategy: Long strangle on Federal Bank

BusinessLine, 15 Oct

Federal Bank Q2 profit jumps 45% to record Rs 1,386 crore

The Economic Times, 16 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Federal Bank Stock And Other Indian Lenders Built For Higher Interest Rates

Simply Wall Street, 12 Oct

Federal Bank Reports 45% YoY Jump in Q2 Net Profit to Rs 1,386 Crore, NII Rises 26%

APAC Media, 16 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Risk

MiddlingFinancial Health · Growth · Profitability · Valuation

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself.

1 of 3 tripwires tripped — Valuation vs its own median of 12.2x · see Key things to watch ↑