Federal Bank is Religare’s pick of the month for May, 13% upside seen at TP of ₹176; should you buy?

On Friday, April 26, shares of Federal Bank settled 0.61 per cent higher at ₹156.95 apiece on the BSE. Federal Bank has given five per cent returns in the last one month, 10.79 per cent returns in the last three months and 17.77 per cent returns in the last one year, according to Trendlyne data.

Also Read: Federal Bank introduces ‘Flash Pay’ RuPay smart key chain for secure contactless payments. Details here

Technical View:

At a current market price (CMP) of ₹156, Religare sees a potential upside of 13 per cent on Federal Bank stock at a target price of ₹176 from an initiation range of ₹154- ₹157 and a stop loss of ₹146.

Religare Broking highlights in its report that Federal Bank has been gradually inching higher forming base on base pattern on the higher degree chart highlights accumulation at the elevated levels. The stock is trading in an upsloping channel from past more than 10 months and recently has rebounded higher after taking support near the lower band of the channel.

‘’It has formed an inverted head & shoulder pattern which coincides with its short term moving averages adding further confirmation to bullish view. Following price pattern and volumes activity, we believe price is now set to inch higher to test the upper boundary of the upsloping channel,” said Religare Broking.

Also Read: Federal Bank Q3 Results: Net profit up 25% to ₹1,007 crore, NII grows 8.5% YoY

Rationale:

The stock was almost unchanged in the previous series but witnessed substantial open interest (OI) addition to the tune of 43 per cent. 98 per cent of the open positions rolled with respect to 94 per cent previously. OI of 23,000 contracts as against 16,000 previously. Decent cash based buying also seen in last three days of April series. With fresh cash accumulation and formation of probable longs, the stock may see higher levels, according to the brokerage.
 

Federal Bank Q3 Results:

Federal Bank reported a net profit of ₹1,006.74 crore for the third quarter of FY24, registering a growth of 25.3 per cent from ₹803.61 crore in the year ago period. The private-sector lender’s net interest income (NII) in Q3FY24 increased 8.5 per cent to ₹2,123.4 crore from ₹1,956.5 crore YoY. The lender’s net interest margin (NIM) during the December quarter fell to 3.19 per cent from 3.22 per cent in the September quarter.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 26 Apr 2024, 09:52 PM IST