The scrip, which fell to Rs 60 on February 23, gained 45 per cent to close at Rs 88 on April 7. "The price of the scrip is expected to further firm up since the price/earnings (p/e) ratio of the share is very low at present," said an analyst. Federal Bank's current p/e ratio is 4.1 compared with the banking industry's average of 9.

The Federal Bank stock crashed to its 52-week low of Rs 59 when foreign institutional investors (FIIs), who were initially bullish on the bank, started moving out of their positions in the counter. "If the current trend in the market continues, we expect the scrip to cross its 52-week high of Rs 110.25 in the next two weeks," said an analyst. Though the bank has a huge exposure of over Rs 400 crore to middle and lower rung non-banking financial companies (NBFCs) which arefacing severe asset-liability mismatches, the market remains bullish on the bank's prospects. The bank's exposure to the NBFC sector constitutes over 10 per cent of its advances. Federal Bank has surpassed most of the projections that it had set for itself during 1997-98.

Total business done by the bank crossed Rs 10,000 crore in the fiscal year just gone by. The bank registered a 36 per cent growth in deposits while advances grew by 40 per cent. In a bid to expand its geographical presence across the length and breadth of the country, the bank opened 18 new branches during the last financial year. Federal Bank currently has a network of 395 branches. Though the bank lined up plans to enter factoring services and housing finance, it has shelved them for the time being. Bank scrips in general have found favour with the market in the current bull run on the bourses.