Shyam Srinivasan’s job at Federal Bank is only half done

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Editor's note: Federal Bank chief executive Shyam Srinivasan isn’t happy. Since January, the bank’s shares may have soared 53%, almost 3x the growth in the Nifty Private Bank index. But he wants more.  “I still think we have not been rewarded as well as we should for the performance,” Srinivasan recently told The Economic Times.  The CEO of the Aluva-based bank has a point. With Srinivasan at the helm for the past 12 years, the private sector lender, once plagued by grassroots-level corruption and unionism, has grown its deposits 1.5x and advances 1.6x vis-a-vis the industry. However, during the same period, the bank’s stock jumped 322%, just short of the Nifty Private Bank index’s 359%. Based on the bank’s September-quarter results, brokerages still expect its shares to rise 10-31% from its current levels. The key question is: Are the markets not rewarding Federal Bank enough? Maybe. With a price-to-book ratio of 1.42, it is still undervalued compared with its peers—a chink in the bank’s otherwise impressive performance under Srinivasan. The ratio measures the market value of a company relative to its book …