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Investing.com - Axis Capital (NYSE:AXS) upgraded Federal Bank Ltd (NS:FB) stock rating from Add to Buy on Thursday, while raising its price target to INR250.00 from INR215.00, citing the bank’s strategic transformation under new leadership.
The research firm noted early signs of improvement across key metrics at Federal Bank, including better CASA (current account savings account) ratios despite industry-wide softness. This improvement has been supported by the bank’s focus on both corporate and granular current account balances.
Federal Bank is shifting its lending strategy, with approximately 75% of its new corporate clients coming from mid-market segments. The bank has also implemented other significant changes including branch reorientation toward growth, senior leadership hires, network expansion, and fee enhancement initiatives.
According to Axis Capital, Federal Bank’s management aims to gradually transform the institution into a full-service universal bank with a return on assets (RoA) of approximately 1.5-1.6%. While this transformation journey is expected to take two to three years, the research firm finds the early indicators encouraging.
Axis Capital considers the risk-reward profile attractive at Federal Bank’s current valuation, which prompted the upgrade and higher price target for the stock.
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