Jhunjhunwala shares close to record highs, could give strong returns even more
Buy Federal Bank: Bank shares in Rakesh Jihunwala’s portfolio show a boom in Federal Bank.
Today’s business is seeing a boom in Federal Bank, a bank stock that Rakesh Jhunjhunwala has included in his portfolio. The stock’s price reached Rs 143, very close to its record high. Markets are liking Monday’s release of the bank’s December quarter results. The brokerage advised that the shares be purchased after the release of the quarterly results. Federal Bank’s profit grew by 54 percent to Rs 803.61 million, an increase of Rs 54 per cent year-on-year. Rakesh Jhunjhunwala held a 2.6% stake in Federal Bank at the end of September quarter. The December quarter update has not yet been published.
Banks create growth momentum
Motilal Oswal, a broker house, has requested Buy on Federal Bank with an Rs 170 target. The stock could earn 21% at the current price of Rs 140. According to the brokerage, 3QFY23 was a strong quarter for the bank. The net earnings have been higher than expected. NII continues to enjoy strong momentum. Due to healthy business growth, repricing and increased profit, the bank’s profit has increased. The bank’s liability franchises are strong and the retail deposit mix is at 90%. CASA is 34.2 percent. The bank’s asset quality is constantly improving. Earnings estimates for FY23/FY24 have been raised by the brokerage house by 7%/5%. RoA/RoE for FY25 could be 1.3%/15.2%
NII growth surprises
Morgan Stanley Brokerage has given Federal Bank stock an outperform rating. The stock has been assigned a target price of Rs 175 Current price is a target of Rs 175 to receive a 25 percent return. According to the brokerage, net interest income has grown by a surprising amount. The brokerage has raised the NIM/RoA guidance FY24.
Federal Bank profit increased by 54 per cent
The December quarter saw a 54% increase in profit at Private Sector Federal Bank to Rs 804 crore. In the December quarter last year, the bank earned Rs 522 crore profit. The bank’s total income increased to Rs 4,967 crore during this period. This is compared with Rs 3,927 crore in a similar quarter last year. The bank’s deposits increased by 15%. The NII rose by around 27 percent to Rs 1,957 Crore.
Bank asset quality has improved
The Gross NPA fell to 2.43 percent. The Net NPA was also lower at 0.73 percent. This is compared to 1.24 percent in that same period last year. In the first nine months of the current financial years (April-December), 60 branches were added by the bank to bring its total number to 1,333. In the final quarter (January-March), 20 more branches will be added by the bank.
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