ICICI Direct Advocates Buying Fedbank Financial Services, Setting Price Target at Rs 200

Fedfina Emerges as a Landmark Success Story in FY26

Fedbank Financial Services (Fedfina) has concluded FY26 on a high note, driven by a strategic pivot toward high-yield, low-risk segments such as gold loans and small-ticket LAP. This shift has led to a significant acceleration in credit growth, exceeding 40% year-over-year (YoY) in FY26. The company's leadership transition has also played a crucial role in its success, enabling a structural improvement in profitability.

Consistent Growth and Improved Financial Performance

Fedfina has successfully decoupled from its historical earnings volatility, sustaining a consistent 5-10% quarter-over-quarter (QoQ) profit after tax (PAT) growth throughout the year. The company's financial performance has shown significant improvement, with return on equity (RoE) expanding to 14% and return on assets (RoA) to 2.6% in Q4FY26. This marks a strong testament to the successful execution of its revamped business strategy.

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Outlook and Recommendation

Maintaining a BUY rating, ICICI Direct's research team has set an unchanged target price of INR 200, based on a price-to-book value (PBV) of 2.2 times for the March 2027 estimated book value per share (BVPS).

This recommendation reflects ICICI Direct's confidence in Fedfina's future growth prospects, driven by its successful business strategy and improved financial performance.

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