In Monday’s early trades, shares of Federal Bank increased by about 7per cent, reaching an all-time high of 129 per share on the BSE.

Since a few days ago, the bank stock has been rising. In the previous five trading sessions, it has increased by roughly 12per cent.

Domestic brokerage and research firm Nirmal Bang stated that “we consider that Federal Bank shares continue to offer good risk-reward despite the return of roughly 25per cent in the last six months and 41per cent run-up from June 2022 low.”

The bank has worked to diversify geographically by reducing Kerala’s branch share from 60per cent in FY11 to 46per cent during the past 12 years.

The brokerage claimed that its main thesis on Federal Bank is supported by the company’s increasing financial results and its reasonable valuation. It has raised its target price for the bank shares to 149 and has assigned the stock a Buy rating.

“The corrective steps adopted by the bank, such as smaller corporate loan ticket sizes, are worth noting. However, if the bank can increase its contingency buffer, we think investors would feel more secure. The bank is renowned for having a precise and consistent liability profile, which translates into a very low cost of funds (CoF). Tier-I capital is currently 13.31per cent, and the bank has no immediate plans to raise further equity capital, “said the note.