Rekha Jhunjhunwala & LIC-backed bank stock hits 52-week high post Q3 results – Should investors buy?

Brokerage CLSA turned bullish on a private sector lender after it reported a strong performance in the December quarter, maintaining an ‘accumulate’ rating.

The stock, backed by marquee investors Rekha Jhunjhunwala and Life Insurance Corporation of India, saw positive sentiment following better-than-expected growth, margin expansion and improvement in asset quality.

On Monday, Federal Bank shares were trading at Rs 277, up Rs 6.65 or 2.46 per cent from the previous close of Rs 270.35. The stock touched a high of Rs 278.40 during the session, which also marked its 52-week high. The 52-week low stands at Rs 172.95.

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CLSA Raises Target Price

CLSA has maintained an ‘accumulate’ rating on Federal Bank Ltd and raised its target price to Rs 300 from Rs 260, citing an all-round performance in the third quarter ended December 2025. The stock was trading at around the Rs 270 levels.

The brokerage said the bank reported strong loan growth, net interest margin (NIM) expansion and better-than-expected asset quality during the quarter. NIM expanded by 12 basis points quarter-on-quarter, supported by a sharper reduction in cost of funds and the impact of a CRR cut.

Federal Bank Q3 Results

Private sector lender Federal Bank reported an 8.98 per cent increase in net profit at Rs 1,041 crore for the December quarter, compared with Rs 955 crore in the year-ago period, according to a regulatory filing.

Total income rose to Rs 7,968 crore from Rs 7,725 crore a year earlier. Interest income increased to Rs 6,867 crore during the quarter from Rs 6,809 crore in the corresponding period last year.

Operating profit grew to Rs 1,729 crore from Rs 1,559 crore in the same quarter of the previous fiscal.

Federal Bank: Asset Quality and Capital Position

On the asset quality front, the bank’s gross non-performing assets ratio improved to 1.72 per cent from 1.95 per cent a year ago. Net NPAs declined to 0.42 per cent from 0.49 per cent at the end of the third quarter of the previous financial year.

CLSA said asset quality metrics were much better than expected. Overall provisions, excluding tax, increased to Rs 332 crore during the quarter from Rs 292 crore a year ago.

The bank’s capital adequacy ratio improved marginally to 15.2 per cent from 15.16 per cent a year earlier. During the quarter, Federal Bank added six branches as part of its calibrated expansion strategy.

The bank also increased its stake in Ageas Federal Life Insurance Company to 30 per cent from 26 per cent through the acquisition of 3.2 crore shares at Rs 30.45 per share. The transaction was completed in November 2025 after receiving approvals from the RBI and IRDAI.

Federal Bank Stock Performance

The stock continues to attract interest from marquee investors. Rekha Jhunjhunwala holds 5.90 crore shares, representing a 2.42 per cent stake in the bank. Life Insurance Corporation of India holds 3.37 crore shares, or a 1.38 per cent stake.

Federal Bank has a market capitalisation of Rs 68,240.39 crore and is part of the BSE 100 index.

The stock has gained 9.59 per cent over the past week and 3.53 per cent in the last month. Over three months, shares are up 30.51 per cent, while the six-month gain stands at 30.60 per cent.

On a one-year basis, the stock has risen 44.71 per cent. It has gained 89.09 per cent over two years, 103.82 per cent over three years, and 267.64 per cent over the past five years.