Federal Bank vs IDBI Bank Which Is More Promising?

Federal Bank and IDBI Bank are two prominent players in the Indian banking sector, each with a unique set of strengths and challenges. Federal Bank is known for its robust growth trajectory, customer-centric approach, and strong financial performance. On the other hand, IDBI Bank has been grappling with high levels of non-performing assets and a lackluster financial performance in recent years. Investors looking to park their funds in banking stocks must weigh the potential of both banks carefully before making an informed decision.

Federal Bank or IDBI Bank?

When comparing Federal Bank and IDBI Bank, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Federal Bank and IDBI Bank.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Federal Bank has a dividend yield of 0.58%, while IDBI Bank has a dividend yield of 1.84%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Federal Bank reports a 5-year dividend growth of 2.13% year and a payout ratio of 0.00%. On the other hand, IDBI Bank reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Federal Bank P/E ratio at 12.31 and IDBI Bank's P/E ratio at 12.97. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Federal Bank P/B ratio is 1.56 while IDBI Bank's P/B ratio is 1.61.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Federal Bank has seen a 5-year revenue growth of 3.06%, while IDBI Bank's is 0.93%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Federal Bank's ROE at 13.68% and IDBI Bank's ROE at 12.93%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹203.90 for Federal Bank and ₹80.85 for IDBI Bank. Over the past year, Federal Bank's prices ranged from ₹139.40 to ₹208.20, with a yearly change of 49.35%. IDBI Bank's prices fluctuated between ₹59.50 and ₹107.90, with a yearly change of 81.34%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.