Is Federal Bank overvalued or undervalued?

Jun 09 2025 03:30 PM IST
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As of May 5, 2025, Federal Bank is fairly valued with a PE ratio of 12.60, significantly lower than peers like HDFC Bank and ICICI Bank, and has outperformed the Sensex with a 1-year return of 29.01%.
As of 5 May 2025, the valuation grade for Federal Bank has moved from attractive to fair. The bank is currently fairly valued based on its financial metrics. Key ratios include a PE ratio of 12.60, a Price to Book Value of 1.53, and a PEG ratio of 1.58, which suggest a reasonable valuation relative to its earnings growth prospects.

When compared to peers, Federal Bank's PE ratio is significantly lower than that of HDFC Bank at 22.51 and ICICI Bank at 22.01, both of which are considered expensive. Additionally, while Yes Bank is also rated fair, it has a much higher PE ratio of 27.18. Notably, Federal Bank has outperformed the Sensex over various time frames, including a 1-year return of 29.01% compared to the Sensex's 7.58%, reinforcing its competitive position in the market.
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