Federal Bank vs IDFC Which Is More Profitable?

Federal Bank and IDFC are two prominent financial institutions in India, both listed on the stock exchange. Federal Bank, established in 1931, is one of the oldest banks in the country, offering a range of banking products and services. On the other hand, IDFC is a diversified financial institution providing services such as infrastructure financing and asset management. Investors looking to invest in the financial sector may consider comparing the performance and growth prospects of these two stocks.

Federal Bank or IDFC?

When comparing Federal Bank and IDFC, 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 IDFC.

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 0.56%, while IDFC has a dividend yield of 0.92%. 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, IDFC 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 12.63 and IDFC's P/E ratio at 19.93. 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 1.60 while IDFC's P/B ratio is 1.29.

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 0.83%, while IDFC's is -0.85%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Federal Bank's ROE at 13.68% and IDFC's ROE at 8.92%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹209.70 for Federal Bank and ₹107.36 for IDFC. Over the past year, Federal Bank's prices ranged from ₹139.40 to ₹217.00, with a yearly change of 55.67%. IDFC's prices fluctuated between ₹104.50 and ₹129.70, with a yearly change of 24.11%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.