Emkay Global Financial Services has upgraded Federal Bank to 'Buy' with target price of Rs 167 in its report.

Federal Bank has consolidated its balance-sheet in FY14 and has demonstrated a spread-out and granular growth of 17% expected for FY15E. Top 20 exposures have fallen to 12% compared to 20%. FB has strengthened its credit appraisal, which has brought about strong improvement in its SME and retail asset quality over the last two years.

Commenting on the investment rationale, the stock broker said, ''Core PPP and earnings CAGR of FB was flat and 13% respectively, over FY11-15E. However, we expect this trend to reverse on account of; spread-out and better loan growth (24% CAGR over FY15-18E); stable NIMs of ~3.3%; healthy asset quality performance and productivity gains; hence, core PPP and earnings CAGR are expected to be 30% and 22% respectively over FY15/18E. Hence, in our view, valuation of 1.2x FY17E BV is reasonable given the expected improvement in earnings profile. Upgrade to Buy.''

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.