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Investment Rationale

A. CASA Momentum Continues, New Funding Levers Opening Up

• Management expects CA growth to pick up through FY27 as business banking and channel business continue to scale.

• The healthy momentum on CASA has been a combination of multiple factors – (1) Near doubling of the rate of CA openings over the past year, (2) a shift toward higherquality SA variants, and (3) recalibration of branch KPIs to reward liability mobilisation as much as asset growth.

B. NIM Expansion Driven by Structural Improvements

• Limited deposit repricing benefits are expected to flow through in Q2, while further asset-yield improvement should be driven by portfolio mix optimisation.

• FB reiterated its guidance of NIM improvement of 5-6 bps each quarter for the next 3-4 quarters (though movement would be non-linear) and continues to see some scope of further NIM improvement.

C. Credit Growth Improves; Focus Segments Continue to Shine

• Management has reiterated its guidance of pursuing midteens growth with a positive bias, supported by improving execution across its chosen segments. We pencil-in credit growth of 17% CAGR over FY26-29E.

• Overall, FB’s growth strategy reflects a balanced approach anchored on profitability, portfolio quality, and granular expansion with multiple levers supporting a gradual yet sustainable acceleration in growth trajectory

Outlook & Valuation

• We are seeing renewed strategy yield results with deposit franchise strengthening and credit growth momentum in focus segments building up.

? We expect FB to deliver a strong 17/15/19/26% CAGR in Advances/Deposits/NII/Earnings growth over FY26-29E, while registering RoA/RoE of 1.3-1.5%/13-14% over FY27-29E vs 1.1/11.4% in FY26, supported by benign asset quality and favourable NIM trajectory.

Valuation: Trading at 1.7x FY28E ABV

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