I did an analysis on federal bank of India after FY09 results . You can download from here, @Rs 230 to 240 i found it to be trading at least about 30 to 35% below being reasonably valued.
Positives
A private sector bank trading at a discount to BV,PE =8,Div=40%.CRAR-tier 1 is healthy at 17.42 % and provision coverage is one of the best.Good NIM @ 4.28 and steady NII.Low Gross and Net NPA at 2.63% and 0.3% respectively.Bank is growing its business in gulf - source of deposits for kerala.Has over 600 branches and growing, it helps to have a good network.
Negatives
The bank did a 1:1 rights issue about 16 to 18 months back @ rs 240. RONW in short term may not grow very fast due to this excess equity.RONW is expected to be in range of 13 to 14% for next year or so.Tax as a % of profit is increasing.
Other private banks like ICICI and HDFC are trading at PE's in range of 20'es and two times p/b. I am more comfortable with Fedral banks valuation it does not seem to be a sexy stock.I own the stock.
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