Federal Bank: Shares Of Jhunjhunwala Portfolio Close To Record High, Can Give Strong Returns Even Further

Stocks in Rakesh Jhunjhunwala’s Portfolio Federal Bank is a part of a sector of the economy that is currently booming, as seen by the performance of the stock in question. Nearing its all-time high, the stock price hit Rs 143. On Monday, the bank reported its quarterly earnings for the period ending in December.

The brokerage firm has also recommended buying the stock after the quarterly report was released. The earnings of Federal Bank rose by 54 percent year on year, reaching Rs 803.61 crore. As of the third quarter of 2018, Rakesh Jhunjhunwala has a 2.6% interest in Federal Bank. There have been no announcements regarding the December quarter.

In the bank, momentum for growth is generated

Motilal Oswal, a brokerage firm, has issued a Buy recommendation on Federal Bank with a Rs 170 price objective. At its present price of Rs 140, the stock offers a potential 21% profit.

The bank, according to the brokerage, has had a successful third quarter of fiscal year 23 (3QFY23). Earnings in net have exceeded projections. The NII economy is still gaining steam.

The bank’s bottom line has improved thanks to buoyant revenue growth and price adjustments. Maintaining a 90% retail deposit mix despite the continued success of their liability franchises. There is a CASA ratio of 34.2%. Bank assets are steadily rising in quality. Revenue projections for FY23 and FY24 have been increased by 7% and 5%, respectively, by the brokerage company. It’s possible that the RoA/RoE in FY25 will be 1.3%/15.2%.

The escalation of NII is unexpected.

Houses of Brokerage The stock of Federal Bank was assigned an outperform rating by Morgan Stanley. The stock price is projected to reach Rs 175. There is a 25% return at the current pricing. The brokerage claims that the increase in net interest income has exceeded expectations. For FY24, the brokerage firm is now predicting higher NIM/RoA.

Profit at Federal Bank is up 54%.

Market participants The December quarter marked a 54% increase in Federal Bank’s profit to Rs 804 crore. In the previous fiscal year’s fourth quarter, the bank posted a profit of Rs 522 crore. Bank earnings increased over this time period from Rs 3,927 crore to Rs 4,967 crore. The bank saw a 15 percent increase in deposits. About a 27 percent boost brought NII up to Rs 1,957 crore.

The quality of the bank’s assets rose

The yearly decline in gross NPA was 2.43 percent. However, the Net NPA dropped from 1.24 percent to 0.73 percent throughout the same time period. During the first nine months of the current fiscal year (April–December), the bank opened 60 additional branches, bringing the total number of locations to 1,333. In the final three months of the year, the bank will open 20 more locations (January-March).