Federal Bank rises 5% as RBI approves KVS Manian's appointment as MD & CEO

RBI has approved the appointment of Krishnan Venkat Subramanian as the Managing Director & Chief Executive Officer of the Bank, for a period of 3 years, with effect from September 23, 2024

Shares of Federal Bank hit a record high of Rs 203.40, rising 5 per cent on the BSE in Tuesday's intraday trade, after the Reserve Bank of India (RBI) approved the appointment of Krishnan Venkat Subramanian (KVS Manian) as the next Managing Director and Chief Executive Officer (MD & CEO) of the private sector lender for three years.

Federal Bank stock surpassed its previous high of Rs 197.80, touched on July 18, 2024. It has surged 37 per cent from its June month's low of Rs 148.25. Thus far in the calendar year, the market price of Federal Bank share has outperformed the market by surging nearly 30 per cent. In comparison, the BSE Sensex has rallied 11.5 per cent during the period.

In an exchange filing, Federal Bank said, based on our application made to the RBI on May 06, 2024, for its approval for the new Managing Director & Chief Executive Officer of the Bank, the RBI has approved the appointment of Krishnan Venkat Subramanian as the Managing Director & Chief Executive Officer of the Bank, for a period of 3 (three) years, with effect from September 23, 2024 after the expiry of the term of the current Managing Director & CEO on September 22, 2024.

Appointment of a strong leadership, coupled with healthy business growth and operational performance, is seen to aid valuation of Federal Bank stock further, ICICI Securities said in a note.

Meanwhile, the board of directors of Federal Bank are scheduled to meet on Wednesday, July 24, 2024, to consider financial results for the quarter ended June 30, 2024 (Q1FY25) and fund raising.

Federal bank ended FY24 with a healthy RoE (14.7 per cent) and with the highest-ever yearly profits of Rs 3,700 crore. Going ahead, the management expects the momentum of growth and profitability to continue on the back of its retail franchise. However, analyst at Centrum Broking, in their Q4 result update, had said they have factored slight NIMs moderation (to factor in CoF increase), operating leverage (linked to maturity of branches) and normalization of credit cost.

“Resultantly, we bake in AUM/PPOP/PAT CAGR at 18 per cent/22 per cent/18 per cent over FY24-26E and expect RoA/RoE to be maintained at 1.3 per cent/14.7 per cent,” the brokerage firm said. The stock has achieved brokerage firm’s target price of Rs 203 per share.