Rakesh Jhunjhunwala Portfolio: Ace investor Rakesh Jhunjhunwala-backed private lender, Federal Bank, has the potential to grow by more than 25 percent thanks to its steady improvement in corporate market share over the past 5 years. The private banker has witnessed a seesaw trade on exchanges over the past year and it looks like the time is right to buy. ICICI Securities has issued a buy recommendation to the bank.
Rakesh Jhunjhunwala Share Holding
Both Rakesh and his wife Rekha Jhunjhunwala have lump sum shares of Federal Bank. However, both portfolios are managed by Rakesh. Ace investor Rakesh Jhunjhunwala, also known as the Big Bull of the Indian stock market, owns 75,721,060 shares, which translates to a 3.7 percent stake in Federal Bank, according to the company’s latest stock pattern available on the BSE. Rakesh Jhunjhunwala along with his wife Rekha and associates own 33 shares with a net worth of more than Rs 25,970.2 crore as of July 5, 2022, according to a stock analysis website trendlyne.com.
Federal Bank Financial Data
The bank said in its Q1 update that annual gross advances grew by about 16.3 percent to about Rs 1.5 lakh crore. According to the bank’s internal rating, retail credit grew 16.7 percent year-on-year, while wholesale book sales grew 15.8 percent year-on-year.
“The total deposit base grew 8.2 percent year-on-year to Rs 1.83 lakh crore, total customer deposits grew 9.1 percent year-on-year, while CASA grew 15 percent year-on-year, and term deposit growth was 6. 1 percent year-on-year,” the bank said in its registration application. † Overall, the Federal Bank posted healthy advances growth, helped by strong system-level growth.
The bank’s monthly increase is almost 10.15%. Shares are up more than 12 percent so far this year.
Should You Invest in Federal Bank Stocks?
Research analysts Renish Bhuva, Kunal Shah and Chintan Shah of ICICI Securities said: “The Federal Bank (FB) annual report FY22 highlights the focus on expanding its footprint during the first half of the decade (2012-22). While focusing on consolidation, the bank continued its operations with a Branch Light and Distribution Heavy approach and focused on the transformation from presence to prominence.”
According to the analysts, as covid-related uncertainties ease and competition intensifies, the bank plans to increase its reach in Network-2 (ex-South) by more than 25-30 percent over the next 3 years. The incremental expansion would take place in newer watersheds. Furthermore, recently added businesses such as credit card, CV and microfinance are well on their way and gearing up to make a meaningful contribution to the incremental growth going forward. Bank plans to grow at 15-17% corporate CAGR over the next 2-3 years, ie ~1.5x more business activity.
Following on from the above, ICICI Securities analysts have issued a buy recommendation to Federal Bank with a target price of Rs 125 each. Taking into account the closing price on July 11 and the target price, the Federal Bank has the potential to gain more than 25 percent going forward.
The expert opinions and investment tips in this News18.com report are their own and not the website’s or its management. Users are advised to contact certified experts before making any investment decisions.
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