Rakesh Jhunjhunwala Portfolio Stock Federal Bank on Friday announced its fourth quarter results in what is being viewed as a weak earnings quarter by most market analysts. However, Anand Rathi believes that South Indian Bank’s earnings will improve in the coming quarters. Brokerage believes Federal Bank share price may go up 115 in the longer term than the present 91 levels, appreciating around 26 per cent from the current market price.
Shedding light on the fundamentals that can promote Rakesh Jhunjhunwala StockResearch report by Anand Rathi says, “Low margins, lower Treasury earnings and higher OPEX led to a ~500bp weaker C/I ratio; however, easing of provisions contributed to the weak operating performance for Federal Bank keeping the RoA at 1%.” Balanced. Asset quality improved as expected. With less formation of stress as compared to earlier, earnings recovery would be better. Considering the bank’s strong liability franchise and capitalization, it will gain market share in the near term ready to achieve.”
“With the higher interest rate environment, NIMs are expected to rise from current levels. Higher margins combined with expected moderation in operating expenses will keep ROA above 1%. With business growth and credit costs normalizing, profitability is A gradual improvement is expected from the current levels. We anticipate ROA of 1.2% and ROE of ~13.4% for FY24.”
The Anand Rathi report further pointed out that slippages for the quarter were at Rs 3.6 billion (1% of debt), which was lower than our estimate. Overall, the restructured Standard Restructured Portfolio declined 5% q/q to 35.4bn (~2.4% of debt). With pandemic-related stress already recognized/restructuring and normalization of economic activity, we expect further moderation in the slippage run-rate.
On its suggestion to situational investors regarding Federal Bank stock, Anand Rathi’s report said, “We maintain our positive outlook on it with a target of Rs 115, its valuation is 0.9x on the book of FY24.” p/abv.”
Rakesh Jhunjhunwala stake in Federal Bank
Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala have a stake in Federal Bank. As per the Federal Bank shareholding pattern for Q4FY22, Big Bull Rakesh Jhunjhunwala holds 5,47,21,060 shares or 2.64 per cent stake in Federal Bank in individual capacity while he jointly holds 2,10,00,000 with his wife Rekha. shares or 1.01 percent stake. Jhunjhunwala. So, the Jhunjhunwala couple together hold 3.65 per cent stake in Federal Bank.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.