Federal Bank shares rise 2% as board approves ₹6,200 crore warrant issue to Blackstone

The lender approved the issuance of 27.29 crore warrants, each entitling the holder to subscribe to one fully paid-up equity share of the bank at ₹227 per share, roughly in line with Thursday’s closing price.

Further, at ₹227 per share, Blackstone will invest ₹6,196 crore in Federal Bank. Investors will pay 25% of the warrant price upfront and the remaining 75% when they exercise the warrants to buy the shares.

“…the Board of Directors of the Bank (“Board”) has approved the issuance by way of a preferential issue on a private placement basis (“Preferential Issue”) of an aggregate of up to 27,297,4043 warrants (“Warrants”), each carrying a right to subscribe to 1 (one) fully paid-up equity share of the Bank having a face value of ₹2/- each (“Equity Share”) (including a premium of ₹225 (Rupees Two Hundred and Twenty Five only) per Equity Share), at a price of ₹227 (Rupees Two Hundred and Twenty Seven) per such Warrant, to Asia II Topco XIII Pte. Ltd. (“Investor”), for cash consideration aggregating up to ₹61,965,107,761,” Federal Bank said in a regulatory filing.

After the warrants are converted into equity shares, Blackstone will hold a 9.99% stake in Federal Bank.

With shareholder approval, Blackstone will get the right to nominate one non-executive director to the bank’s board if it exercises all the warrants and holds at least 5% of the total paid-up share capital.

Following the development, Federal Bank shares were trading at ₹228.90 apiece on NSE, rising 0.46%.

Federal Bank’s Q2 earnings

The bank had reported a 9.6% decline in its standalone net profit at ₹955 crore for the July to September quarter as compared to ₹1,057 crore seen in the same quarter last fiscal year. Sequentially, net profit rose 10.85%, driven by robust operating income and efficient cost management.

The bank’s net interest income during the period grew 5.4% to ₹2,495 crore as against ₹2,367 crore year-on-year (YoY). The net interest income (NII) is one of the key metrics to assess a banking or financial entity's financial performance.

The Federal Bank’s asset quality remained among the best in the decade, with GNPA at 1.83% and NNPA at 0.48%.

Federal Banks’ gross NPA at the end of Q2 FY26 stood at ₹4,532.01 crore, which as a percentage of gross advances stood at 1.83%.

As of September 30, the bank’s Net NPA stood at ₹1,165.16 crore, accounting for 0.48% of net advances. The Provision Coverage Ratio (excluding technical write-offs) was 73.45%.

The bank’s total income for the quarter under review rose 3.75% year-on-year to ₹7,824.33 crore. The annualised earnings per share (EPS) stood at ₹15.42 for the quarter, while the net interest margin (NIM) was maintained at 3.06%. Net Interest Margin (NIM) improved 12 basis points (bps) to 3.06% QoQ.