Shares of the private sector lender in Monday's trade were seen gaining some ground despite overall weak market mood. At around 9:50 am, Federal Bank shares were up over 1 per cent or Rs 2.2 at Rs 181.9 apiece, while at the day's high it gained up to Rs 182.45- up 1.5 per cent over the previous day's close.

The gains in the stock are likely triggered after foreign brokerage Citi has reiterated its 'buy' rating on the counter, with the target pegged at Rs 242, implying gains of 35 per cent from the previous close.

The brokerage's confidence in the stock comes as the lender's new CEO Krishnan Manian came up with the strategy of embarking on 'Breakthrough Phase', to modernize and inch closer to top private banks with a universal bank vision and national franchise.

Also, the CEO aims at enhancing the bank's profitability/ return on assets (RoA) while sustaining growth, instilling P&L culture in business heads, modernized state-specific expansion beyond Kerala.

Furthemore, the management looks to rationalise cost of deposits. reshapling product mix as well as enhance fees, added the brokerage. The company's targeted segments include 
 mass affluent/MSME/mid-corporate/NR/next gen.

Besides, the brokerage noted that with valuations at 1.1x FY27E book appear reasonable for the lender.

For the review quarter, the bank's net profit declined 8.81 per cent to Rs 944.15 crore in the quarter ended December 2024 as against Rs 1035.42 crore during the previous quarter ended December 2023. Total Operating Income rose 19.39 per cent to Rs 7264.87 crore in the quarter ended December 2024 as against Rs 6085.20 crore during the previous quarter ended December 2023.

In the last one year, the stock has gained over 20 per cent, while its 3-year return is at 95 per cent. In comparison, Nifty Private Bank has gained just 4 per cent.