Why Rakesh Jhunjhunwala Stock May Hit New 52-Week-High Post Q1 Business Update?

In its business update, Federal Bank declared total deposits of Rs 2,22,513 crore as of June 30, 2023, up 21.4 percent from Rs 1,83,355 crore as of June 30, 2022. Customer deposits (total deposits excluding interbank deposits and certificates of deposit) at the bank totalled Rs 2,10,439 crore in Q1FY24, up 17.2 percent from Rs 1,79,586 crore in Q1FY23.

The bank's total advances jumped by 20.9 percent, to Rs 1,86,593 crore from Rs 1,54,392 crore, while its retail and wholesale credit books grew by 20.2 and 21.6 percent, respectively. According to Federal Bank, its retail to wholesale ratio reached 54:46. The lender's CASA ratio for the June quarter was 31.85% compared to 36.84% YoY and 32.68% QoQ.

Commenting on the outlook of Q1FY24 provisional numbers of Federal Bank, the brokerage firm Axis Securities said "The bank reported a healthy advances growth of 21/5% YoY. Growth in both the Retail and Corporate segment continued to remain healthy at ~20/22% YoY respectively. The mix of Retail to Corporate has remained stable at 54:46 YoY/QoQ. A key monitorable for the quarter would be the growth in the higher-yielding segments and their improving mix in the portfolio as they remain a key lever in improving the margins for the bank."

"Federal Bank's deposits growth was strong at 21/4% YoY/QoQ. Deposits growth was primarily led by TDs while CASA deposits growth took a backseat. CASA Deposits grew by 5%/2% YoY/QoQ, while TD growth was robust at 30/6% YoY/QoQ. Resultantly, CASA Ratio (at a multi-quarter low) stood at 31.9% vs. 36.8/32.7% YoY/QoQ. As stated by the management previously, the CoF during the quarter will continue to inch up as the balance of the deposit base gets repriced," Axis Securities said in a note.

Federal Bank Share Price Target

Dnyanada Vaidya and Prathamesh Sawant, CFA, the two research analysts of Axis Securities said "Business growth continues to remain robust with no visible sign of slowing down so far. While margins could remain soft in H1FY24, improving the share of higher-yielding products in the portfolio mix along with stabilising CoF are likely to aid margins in H2FY24. We remain confident in FB's ability to deliver a consistent RoA of 1.3% despite margin pressures. The current valuations of 1.1x Sep'24E ABV are undemanding for an expected strong RoA/RoE delivery of 1.3%/15-16% over the medium term. We re-iterate a BUY on the stock with a target price of Rs 155/share, implying an upside of 22% from CMP."

The shares of Federal Bank opened today on the BSE at Rs 132.50 apiece. The stock made a 52-week-high of Rs 143.35 on (16/01/2023) and a 52-week-low of Rs 94.00 on (06/07/2022).

Rakesh Jhunjhunwala Stake In Federal Bank

As per the shareholding pattern of Federal Bank for January to March 2023 quarter, late ace investor Rakesh Jhunjhunwala held fully paid-up equity shares of 2,45,00,000 or 1.17% stake and his wife Rekha Jhunjhunwala held 4,82,13,440 fully paid up equity shares or 2.31% stake in the company.

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