Rakesh Jhunjhunwala portfolio: After climbing to its 52-week high of Rs107.65 apiece levels in April 2022, Federal Bank shares went through profit-booking spree and came close to its 52-week low of Rs77.50 apiece levels on NSE. However, the stock has given some strong rebound logging around 13 per cent rise in last one month. After strong Q1 results on Friday, stock market analysts have become highly bullish on Federal Bank shares. They are of the opinion that Federal Bank share price may go up to Rs128 apiece levels in long term.

Key takeaways from Federal Bank Q1 results 2022

Giving 'buy' tag to this Rakesh Jhunjhunwala portfolio stock, Yash Gupta, Equity Research Analyst at Angel One said, "In Q1FY23, the company reported an increase in interest earned from Rs3355 crores in Q1FY22 to Rs3628 crores in Q1FY23 up by 8.14%. Net interest income has also shown good signs of growth up by 13.2% from Rs1418 to Rs1605 crores in Q1FY23. Major surprise comes from the net profit, net profit up by 63.5% from Rs367 crores to Rs600 crores in Q1FY2023 on back of sharp fall in provisioning, provisioning & contingencies fall from Rs640 crores in Q1FY22 to Rs166.7 crores in Q1FY23. We continue to see improvement in GNPA, this quarter company reported GNPA of 2.69 as compared to 2.8 in Q4FY22 and 3.5% in Q1FY22."

"Federal Bank witnessed strong rebound in its credit growth with total advances grew by 16% YoY led by CV/CE segment followed by auto & gold loan. All these performance reflected in its net level, with net profit zoomed by 63.5% YoY. The bank managed its cost well and strong NII growth drove the net profitability during the quarter. The bank is likely to continue its strong growth momentum in coming quarters on the back of strong liability franchise and favourable retail deposit mix," said Arijit Malakar, Head of Retail Research at Ashika Group.

"The Federal Bank reported strong broad-based credit growth while overall costs have been well managed hence resulting in the highest ever profit. On the asset quality front, the gross non-performing assets improved to 2.69% of the gross advances as of June 2022, from 2.8% QoQ. Besides strong collection mechanism helped the Federal bank’s strong recovery and up-gradation of Rs281 crore," said Jitendra Upadhyay, Sr Equity Research Analyst at Bonanza Portfolio.

Federal Bank share price target

Advising 'buy on dips' strategy to the stock market investors, Sumeet Bagadia, Executive Director at Choice Broking said, "Federal Bank shares are on cusp of giving breakout above Rs100 on closing basis. However, the banking stock has been rising continuously and there can some profit-booking taking place in the counter. In such case, one should buy on dips at around Rs92 per share levels for short to medium term target of up to Rs110 apiece levels."

Suggesting 'buy and hold' for long term, Anand Dama, Senior Research Analyst at Emkay Global Financial Services said, "We revise FY23/24 earnings estimates by 5 per cent against 1 per cent, factoring in lower LLP/Opex, and expect RoAs/RoEs to improve to 1.1 to 1.2 per cent against 13 to 15 per cent (without capital infusion) over FY23-25E. Retain Buy with a revised TP of Rs128 per share."

Rakesh Jhunjhunwala shareholding

According to shareholding pattern of Federal Bank for March 2022 quarter, Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala own shares of this south Indian bank. Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala together hold 2,10,00,000 or 1.01 per cent stake in the bank. However, in individual capacity Rakesh Jhunjhunwala holds 5,47,21,060 Federal Bank shares or 2.64 per cent stake in the bank. So, Jhunjhunwala couple together hold 3.65 per cent stake in this south Indian bank.