Rakesh Jhunjhunwala’s portfolio: Due to strong Q1 results, Federal Bank’s share price has been rising for the past week. Indeed, the stock had emerged from its consolidation phase well before the Q1 FY2022-23 results, as the market anticipated strong earnings from the south Indian bank. This Rakesh Jhunjhunwala stock has increased by more than 26% in the last month. The share price of Federal Bank is close to its 52-week high, having closed just 0.40 away from its 52-week high of 107.65 on Tuesday.
According to stock market experts, this Rakesh Jhunjhunwala stock has broken out at 104 apiece levels on a closing basis, and after strong Q1 results, it is expected to continue in an uptrend and can reach 125 apiece levels in the short term.
Sumeet Bagadia, Executive Director at Choice Broking, commented on the Federal Bank share price outlook “Federal Bank shares are in an uptrend, with minor resistance at around 110 per share. The banking stock is expected to break through its immediate barrier once it maintains above 108 per share levels for one to two hours after reaching a new 52-week high. It may rise to 115 in the near term, and those who own this stock are advised to keep it with a stop loss at 100 per share.”
Santosh Meena, Head of Research at Swastika Investmart, commented on the rise in Federal Bank shares, saying, “Federal Bank Ltd. has seen a great performance post its Q1 FY23 results as the bank had posted strong results with net profit rising 64 percent YoY due to improvement in asset quality and growth in advances.” The bank saw an increase in NIMs, strong growth in core fee income, particularly in retail, notable improvement in asset quality, and a sequential reduction in cost to income ratio, albeit the last quarter was impacted by one-time family pension costs. One thing to keep in mind is that new retail slippages have increased; however, the majority is coming from the restructured book, and the bank expects LGDs to be low because they are completely backed by secured mortgages. We like the bank because of its strong granular liability franchise, low cost of funds, collaboration with fintechs and digital initiatives, and visibility of growth.”
According to Swastika Investmart’s Santosh Meena, the ROA of Federal Bank’s share price is expected to rise due to the increasing share of high-yielding retail loans.
“Despite the aforementioned positives and the current rise in the share price, we believe the bank is a serious candidate for rerating because the valuation remains low. The counter is breaking out of a long consolidation with a symmetrical triangle breakout, resulting in strong bullish momentum. On an immediate basis, 110 is a horizontal resistance level; above this, we can expect a rally to the 125 level. At any correction, the 100-96 area will act as a strong demand zone.”
Rakesh Jhunjhunwala shareholding
According to the Federal Bank shareholding pattern for the January to March 2022 quarter, Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala own a stake in this south Indian bank. The Jhunjhunwalas own a stake in the bank worth $2.1 million, or 1.01 percent. Individually, Rakesh Jhunjhunwala owns 5,47,21,060 Federal Bank shares, or 2.64 percent of the bank. As a result, the Jhunjhunwalas own 3.65% of Federal Bank.