In the past twelve months, the stock of the Federal Bank has rallied over 50%. The shares of the company were trading at around Rs 135 a piece during the early hours of trading on Wednesday. This is twice the gains of NIFTY Bank, the benchmark bank index during the same period. It has surged by 24.5% to 41,275 points in the period.
The Kerala-headquartered bank is the largest sectorial pick of the late ace investor Rakesh Jhunjhunwala. The legendary investor passed away in August last year.
As of the recent shareholding data for December 2022, his wife Rekha Jhunjhunwala and family hold a 3.48% stake or over 7.27 crore shares in the private-sector Federal Bank. Their stake is presently valued at Rs 982 crore.
The lender clocked its highest-ever profit of Rs 804 crore for the Q3FY23 quarter that ended in December 2022. This is 54% more than the Rs 522 crore it earned during the same quarter in the last financial year. As for its net interest income (NII), it increased by 27% to Rs 1,956 crore in Q3FY23 from Rs 1,539 crore in Q3FY22.
Multiple brokerage firms have initiated positive coverages on Federal Bank.
Among them, HDFC Securities and Prabhudas Lilladher have given a ‘buy’ rating on the shares of Federal Bank with a target price of Rs 175. This translates into an attractive 30% upside for the investors.
Written by Vikalp Mishra