Check Before You Invest : Fedbank Financial Services Ltd

BSE: 544027 NSE: FEDFINA ISIN: INE007N01010

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does Fedbank Financial Services Ltd belong to?

Fedbank Financial Services Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q.2 Is Fedbank Financial Services Ltd a good quality company?

Fedbank Financial Services Ltd is a average quality company, based on a somewhat consistent 10-year financial track record.

Q.3 Is Fedbank Financial Services Ltd undervalued or overvalued?

Fedbank Financial Services Ltd appears Somewhat overvalued, as its key valuation ratios are above with their past averages.

Q.4 Is Fedbank Financial Services Ltd a good buy now?

Fedbank Financial Services Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Operating Income growth is 29.08% for FY-2025, which is below its 5-year CAGR of 35.25%, indicating slower growth.

Q.2 Return on Assets of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Return on Asset is 1.9%, which is in line with its 5-year historical median of 1.9%, indicating stable earnings on assets.

	Current Level	5-year Historic Median
NPM%	11.06	11.9
PPOP%	29.48	35.84
RoA%	1.9	1.9

Q.3 Return on Equity (ROE) of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Return on Equity is 9.4% for FY-2025, which is below its 5-year historical median of 10.5%, indicating the business is making worse use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 29.48% for FY-2025, which is below its 5-year median(35.84%), indicating decreasing margins.

Q.5 Net Profit Margin of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 11.06% for FY-2025, which is below its 5-year median( 11.9%), indicating decreasing margins.

Q.6 Total Asset growth of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Total Asset growth is 18.88% for FY-2025, which is below its 5-year CAGR of 26.54%, indicating slower growth.

Q.7 Capital Adequacy ratio of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Capital Adequacy ratio (CAR) is 21.9% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Q.8 Asset Quality of Fedbank Financial Services Ltd?

Fedbank Financial Services Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 2% for FY-2025, which is in line with its 5-year median 2%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 1.22% which is below its 5-year median( 1.33%), indicating improving asset quality.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Fedbank Financial Services Ltd?

Promoters hold 60.79% of the Fedbank Financial Services Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of Fedbank Financial Services Ltd vs Industry Peers?

Fedbank Financial Services Ltd AUM CAGR is 26.54%, compared to the 5-year industry median CAGR of 9.9%, indicating faster growth and gaining its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Fedbank Financial Services Ltd vs industry peers

Fedbank Financial Services Ltd profit metrics are in line with the industry median level of 7.31%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM%	11.06	15.95
PPOP%	29.48	4.54
RoA%	1.9	1.45

Q.3 Operating efficiency of Fedbank Financial Services Ltd vs industry peers?

Fedbank Financial Services Ltd ROCE (9.8) is above the industry median of (4.4); while the current ROE (10.5) are above than the 5-year average Industry ROE (2.7). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM%	11.06	15.95
PPOP%	29.48	4.54
RoA%	1.9	1.45
ROCE%	9.9	4.4
ROE%	9.4	2.7

Valuation & price assessment

Q.1 Stock return of Fedbank Financial Services Ltd over the last decade?

Over the last 1 years, the stock has delivered a CAGR of 66.04% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	-	-	-	66%

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	15.94	18.06	28.96
Price to Book	1.87	1.84	1.11
Price to Sales	2.46	2.54	9.10
EV to EBITDA	10.7	10.83	11.77

Q.4 Valuation ratios of Fedbank Financial Services Ltdvs historical and industry averages?

The current Price to book ratio (P/B) 1.87% is higher than its historical median of 1.84%, indicating that at the current price the stock is overvalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

Fedbank Financial Services Ltd return on invested capital (ROIC) is 7.07% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

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