Brokerage and analyst are bullish on Rakesh Jhunjhunwala banking stocks—Federal Bank ad Karur Vysa Bank — on back of improved asset quality and strong breakout in the two stocks.  

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Fondly called as Big Bull of the Indian market, billionaire investor Rakesh Jhunjhunwala holds 3.7% stake in Federal Bank and 4.5% stake in Karur Vysya Bank.  

As per latest corporate filings, the ace investor holds 75,721,060 shares of Federal Bank and 35,983,516 of Karur Vysya Bank for the quarter ended March 2022.  

Federal Bank 

At a record price of Rs 87, brokerage firm Hem Securities recommended to accumulate the shares of private bank with target price of Rs 98, an upside of 13%.  

The brokerage's bullishness is based increased advances, improved asset quality and one of the best retail and steady deposit franchises among private banks. 

""Federal Bank advances increased by 3% QoQ / 10% YoY to Rs 1,476 billion, owing to strong growth in Agri and SME loans.  The bank's asset quality improved, with GNPA falling to 2.8 percent from 3.06 percent in the previous quarter, thanks to stronger recoveries and upgrades," it said.  

The bank's liability franchise remains solid, with CASA plus Retail TD of 92 percent, and the bank intends to gradually increase its CASA deposits over the medium term, it underlined.  

"Despite the pandemic, the bank has managed asset quality well, and the restructured pool is operating well, with collections staying healthy," the brokerage added.  

Shares of Federal Bank were trading with nearly one per cent loss to Rs 89 apiece in Monday's intraday trade on the BSE.  

Karur Vysya Bank 

At more than Rs 2 billion, in the last 18 months, Karur Vysya Bank’s reported highest earnings in q4fy22, while GNPL pool declined sequentially for the third quarter, while RoA sustained around one per cent.  

On Thursday, the stock witnessed a strong breakout. Gaurav Ratnaparkhi-Head of Technical Research at Sharekhan by BNP Paribas said the stock has seen a strong breakout, accompanied by large volumes.  

In terms of the bar patterns, it has broken out from an Arrow pattern that was formed on the daily chart, the expert pointed out.  

"Also, the stock managed to surpass its crucial swing high on the daily chart. The positive momentum is expected to continue going ahead. On the upside, 54 & 56.60 will be the targets from medium term perspective," he added.   

On the Friday's closing price of Rs 48.20 and target of Rs 56.60, the upside turns out to be around 18 per cent. 

As per the latest corporate shareholdings, Rakesh Jhunjhunwala and Associates publicly holds 34 stocks in the quarter ended March 2022. The value of these stocks has been pegged over Rs. 29,322.7 crore as on June 2022, as per stock analysis platform trendlyne.com