Rakesh Jhunjhunwala's below ₹100 stock gets 'buy' tag from Anand Rathi
2 min read . Updated: 09 May 2022, 11:57 AM IST
Premium- Rakesh Jhunjhunwala portfolio: Anand Rathi believes that Federal Bank share price may go up to ₹115 in long term from current ₹91 levels
Rakesh Jhunjhunwala portfolio stock Federal Bank announced Q4 results on Friday, which is seen as a weak earning quarter by majority of the market analysts. However, Anand Rathi believes that earning of the south Indian bank will improve in upcoming quarters. The brokerage believes that Federal Bank share price may go up to ₹115 in long term from current ₹91 levels, logging around 26 per cent appreciation from current market price.
Highlighting the fundamentals that may fuel this Rakesh Jhunjhunwala stock, Anand Rathi research report says, "Lower margins, less Treasury income and higher opex led to a ~500bp weakened C/I ratio; moderating provisions, however, counterbalanced the weak operating performance keeping RoA at 1% for Federal bank. Asset quality improved as slippages were less than anticipated. With the lower formation of stress than earlier envisaged, recoveries in earnings would be better. Given the bank’s strong liability franchise and capitalisation, it is set to gain market share in the near term."
"With a higher interest-rate environment, NIM is expected to increase from current levels. Higher margins combined with expected moderation in operating expenses would keep RoA above 1%. With a pick-up in business growth and normalisation of credit cost, profitability is expected to gradually improve from current levels. We estimate a 1.2% RoA and ~13.4% RoE for FY24," brokerage added.
Anand Rathi report further pointed out that slippages for the quarter were contained at Rs3.6bn (1% of loans), less than we estimated. Overall, the restructured standard restructured portfolio declined 5% q/q to Rs35.4bn (~2.4% of loans). With the bulk of the pandemic-related stress already recognized/restructured and economic activities normalising, we expect further moderation in the slippage run-rate.
On its suggestion to positional investors in regard to Federal Bank share, Anand Rathi report said, "We maintain our positive view on it with a Rs.115 target, valuing it at 0.9x P/ABV on its FY24e book."
Rakesh Jhunjhunwala shareholding in Federal Bank
Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala have shareholding in Federal Bank. As per 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 whereas he holds 2,10,00,000 shares or 1.01 per cent stake jointly with his wife Rekha Jhunjhunwala. So, Jhunjhunwala couple together holds 3.65 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.
