On the contrary…I am expecting share price to be 4x-5x in 5 years…am I being over optimistic here…??
I would still like to believe management guidance of 13000 crores of profit in 5th year from now…
I expect number of shares to reach 900 crores by then…
So with 14.5 rs of EPS and a P/E of 25 (that valuation is easily possible for a bank growing it’s profits at 35%), share price can reach 350-360 level.
.
It is my kind of ‘conservative estimate’ xD

FEDERAL BANK –

Q4 FY 24 results and concall highlights –

Key financial parameters –

Deposits @ 2.52 lakh cr, up 18 pc YoY

Advances @ 2.09 lakh cr, up 20 pc YoY

Gross NPAs @ 2.13 vs 2.36 pc

Net NPAs @ 0.6 vs 0.69 pc

PCR @ 71.08 vs 70.02 pc

Credit cost for FY24 @ 0.23 vs 0.40 pc YoY

Q4 NII @ 2195 vs 1909 cr, up 15 pc YoY

Other income @ 754 vs 734 cr

Fee income @ 620 vs 542 cr

PAT @ 906 vs 903 cr ( affected adversely due – Rs 162 cr being set aside for VRS settlement of employees )

Cost of funds @ 5.97 vs 5.21 pc YoY

Yield on Advances @ 9.48 vs 9.13 pc YoY

NIMs @ 3.21 vs 3.36 pc YoY

Segment wise loan / advance growth –

Retail – 20 pc

Agri – 28 pc

Business banking – 21 pc

CV/CE – 57 pc

MFI – 141 pc

Commercial banking – 27 pc

Corporate banking – 12 pc

High yielding segments include – Credit cards, Personal loans, MSME loans, CV/CE loans, Micro Finance. These segments are also the fastest growing ones. These segments combined form 24.6 pc of loan book vs 21.8 pc YoY – growth and asset quality in these segments is a key monitor able to be tracked

CASA ratio @ 29.38 vs 33.81 pc ( falling CASA is an industry wide phenomenon )

CASA + Deposits ( < 2 cr ) @ 80 pc of total deposits vs 85 pc YoY

Total branch count @ 1500, up by 140 branches YoY

In Q4, slippages were below the recoveries – a very very encouraging sign ( there were no one offs in recoveries ). Q4 slippages were at 352 cr vs 436 cr YoY

Expect fee income to keep growing @ 20 pc kind of rates for FY 25 as well

The rapid branch expansion is leading to increased growth in operating expenses ( even after accounting for one time VRS related provisions )

Aim to open a min of 100 branches in FY 25

Guiding for a credit cost of 30 bps for FY 25

Market conditions wrt garnering deposits continues to be tough. Should see cost of deposits icing up further – over next 1-2 Qtrs

Despite that, the bank is guiding for a 2-3 bps NIM expansion due greater focus on high yielding business

IT spends @ 6 pc of OPEX. Aim to take this to 8 pc of OPEX

Overall OPEX is likely to remain elevated due IT spends, branch expansion

Disc : holding, biased, not SEBI registered

Since last 12 months, due to amendment in SEBI disclosure of information for listed companies, we find signficant increase in intimations to stock exchange about regulatory action. The SEBI guideline made such disclosure necessary, which were not previously covereed as material event. Find enclosed SEBI dislosure amendment paper.

Refer to page 23 of this PDF file
20) Action(s) taken or orders passed by any regulatory, statutory, enforcement authority or judicial body against the listed entity or its directors, key managerial personnel, senior management, promoter or subsidiary, in relation to the listed entity, in respect of the following:
(a) suspension;
(b) imposition of fine or penalty;
(c) settlement of proceedings;
(d) debarment;
(e) disqualification;
(f) closure of operations;
(g) sanctions imposed;
(h) warning or caution; or
(i) any other similar action(s) by whatever name called;
along with the following details pertaining to the actions(s) initiated, taken ororders passed:

i.name of the authority;
ii. nature and details of the action(s) taken, initiated or order(s) passed;
iii.date of receipt of direction or order, including any ad-interim or interim orders, or any other communication from the authority;
iv.details of the violation(s)/contravention(s) committed or alleged to be committed;
v.impact on financial, operation or other activities of the listed entity, quantifiable in monetary terms to the extent possible.

As a result, all kind of regulatory notices now being reported since June 2023 to Stock exchange which was previously optional and disclosed based on material impact assessment of management.

As a result. across all companies one see major increased in announcement about receipt of notice from income tax, GST, excise, custom and other regulatory bodies. One has to read notice/order/disclosure and form opinion whether such notices are covered under business as usual or are for material breach/fraud which can be adversely affect future of the company.

This is my understanding and may be incorrect.
Disclosure: Akzo Noble among my Top 15 core equity holding in my portfiio. My view may be biased due to my holding. I may increase/decrease/exit from the company without informing forum. I am not suggesting any investment action in the company. I am not a SEBI registered advisor.