Federal Bank vs SBI Which Is More Attractive?

Federal Bank and State Bank of India (SBI) are two major players in the Indian banking sector, both listed on the stock exchange. Investors often compare the performance of these two stocks due to their significant market presence and influence. Federal Bank is known for its focus on retail banking and technological innovations, while SBI is the largest bank in India with a wide range of products and services. Understanding the differences in their business models and financial performance can help investors make informed decisions when considering investing in either Federal Bank or SBI stocks.

Federal Bank or SBI?

When comparing Federal Bank and SBI, 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 SBI.

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 SBI has a dividend yield of 4.03%. 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, SBI reports a 5-year dividend growth of -44.26% year and a payout ratio of 56.44%.

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 SBI's P/E ratio at 14.70. 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 SBI's P/B ratio is 0.98.

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 SBI's is 1.88%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Federal Bank's ROE at 13.68% and SBI's ROE at 7.09%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are ₹209.70 for Federal Bank and $26.50 for SBI. Over the past year, Federal Bank's prices ranged from ₹139.40 to ₹217.00, with a yearly change of 55.67%. SBI's prices fluctuated between $19.00 and $27.02, with a yearly change of 42.21%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.