Strength in the Stock Market on Tuesday as Three Stocks in the BSE Midcap Index—Indian Hotels Company (IHCL), Federal Bank, and Coforge—showed gains of up to 5%, reaching record highs. By 2:30 PM, the BSE Sensex was trading up 1.15%, or 886 points, at 78,225.
Federal Bank Shows Strength
Federal Bank's share rose 5%, reaching a new high of ₹210.50. This surge is due to expectations of strong upcoming quarterly results. In Q2 FY25, despite challenging conditions, the bank recorded stable profits with improvements in several key indicators.
Analysts’ View
Analysts at Motilal Oswal have expressed confidence in Federal Bank. According to them, the bank demonstrated strong growth during FY22-24, with a compound annual growth rate (CAGR) of 20% in the loan book and 18% in deposits.
However, the bank faced operational expenses due to pressure on net interest margin (NIM) and rising funding costs. Despite this, management changes and promising growth potential have led analysts to believe the bank's performance will improve. Based on FY26’s estimated valuation, analysts anticipate further upside for the bank's share.
Federal Bank: Improvement in Asset Quality and Growth Prospects
Federal Bank maintained strong asset quality in FY24. The bank’s gross non-performing assets (NPA) improved to 2.1% and net NPA to 0.7%, reflecting a strategy of selecting the right clients and lending responsibly.
According to brokerage firms, the bank’s loan book is expected to grow at an 18% CAGR during FY25-27. Fintech partnerships and effective risk management will contribute to this growth. The firm has rated the bank's share as "Buy" with a target price of ₹230.
IHCL: Impressive Performance and Higher Target
Indian Hotels Company Limited (IHCL) shares rose by 2.5% to ₹755.60. The company performed well in Q2 FY25. Management has projected double-digit revenue growth in FY25, driven by expansion in new businesses and solid performance in existing stores.
Hotel segment revenue grew by 16.5% in October, with further acceleration expected for the remaining months of Q3. Elara Capital has raised its target price for IHCL to ₹795 and upgraded its rating from "Sell" to "Accumulate."
IHCL plans to open 25 new hotels in FY25. Taj-branded hotels face minimal competition in India, which has contributed to the company’s ongoing growth. Brokerage firms noted that IHCL exceeded their Q2FY25 estimates and benefited the most from the demand strength.
Coforge: Shares Reach Record High on Strong Order Book
Coforge shares rose 3% on Tuesday, reaching a record high of ₹8,236.95. Over the past six months, the share has surged by 71%, while the BSE Sensex increased only by 6%.
Order Book: Coforge's 12-month order book stands at $1.3 billion, reflecting a 40% year-on-year increase.
New Clients: The company added 13 new clients in Q2 FY25.
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