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Rakesh Jhunjhunwala-backed Federal Bank shares have been in uptrend since announcement of its strong Q2FY23 results. The banking stock hit life-time high on Friday, immediately after the announcement of second quarter results for the financial year 2022-23. Later on, Federal Bank share price climbed to new high on Monday and Tuesday session as well. Federal Bank share price today again hit a new high of 134.10 apiece on NSE within an hour of stock market's opening bell.

According to stock market experts, Federal Bank has managed keep slippages under control. The Rakesh Jhunjhunwala-backed bank also achieved cost to income ratio guidance ahead of the time. They went on to add that the management has re-iterated its growth guidance that has gone down well among Dalal Street bulls. They said that the stock may go up to 165 apiece once it manages to break its current hurdle place at 145 to 150 apiece levels. However, they maintained that the stock may continue to remain bulls' favourite and may go up to 230 apiece levels by next Diwali.

Speaking on the reason for uptrend in Federal Bank shares, Yes Securities report says, "Federal Bank's margins at 3.30 per cent was up 8 bps QoQ on account of 35bps QoQ increase in yield on advances as against 16 bps QoQ increase in cost of deposits. Gross slippages amounted to 3.90bn (annualized slippage ratio of 1.0%) and recoveries and upgrades were healthy at 3.29bn. The bank had guided that they would get closer to 48% in FY24 but has upfronted the achievement. The bank still guides for a cost to income ratio of 48-49%."

Federal Bank share price target

The Yes Securities report went on to add, "Provisions were 2.68bn, up by 61% QoQ but down -8.5% YoY. Provisions have risen on sequential basis since the bank has chosen to enhance PCR by 23." The brokerage said that Federal Bank share price may go up to 165 apiece in mid to long term.

Recommending Federal Bank shares as one of Diwali 2022 stocks to buy today, Anuj Gupta, Vice President — Research at IIFL Securities said, "One can buy Federal Bank shares ahead of this Diwali and hold for the target of 230 apiece by next Diwali."

Rakesh Jhunjhunwala shareholding in Federal Bank

According to Federal Bank's shareholding pattern for April to June 2022 quarter, Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala have invested in this south Indian bank. Rakesh Jhunjhunwala holds 5,47,21,060 shares or 2.63 per cent stake in individual capacity whereas he and Rekha Jhunjhunwala jointly holds 2,10,00,000 shares or 1.01 per cent stake. So, both Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together holds 4.63 per cent stake in Federal Bank.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Asit Manohar

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