Fundamental Call: 2 Rekha Jhunjhunwala Portfolio Banking Stocks To Buy This Week

Following their Q3 financial results, Federal Bank and Canara Bank received buy calls from the financial services sector. Rekha Jhunjhunwala, the wife of well-known investor Rakesh Jhunjhunwala, has these two banking stocks in her portfolio. In accordance with corporate shareholdings disclosed for December 31, 2023, Rekha Jhunjhunwala has a net worth of around Rs. 40,519.3 Cr., as per data from Trendlyne. She publicly owns 25 stocks.

Federal Bank

In the quarter that ended on December 31, 2023, Federal Bank had its highest quarterly net profit ever, of Rs 1007 Cr. This is a YoY increase of 25.28% from the year-ago quarter's Rs 803.61 Cr. As of December 31, 2023, the bank's total business was Rs. 438776.39 Cr, up 18.72% from Rs. 369581.25 Cr during the same quarter of the previous fiscal year. As of December 31, 2023, total deposits have climbed from Rs. 201408.12 Cr in the year-ago quarter to Rs. 239591.16 Cr. Operating profit for the bank was reported at Rs. 1437.33 Cr during the quarter under review, up 12.80% YoY from Rs. 1274.21 Cr in Q3FY23.

Net advances on the asset side grew from Rs. 168173.13 Cr on December 31, 2022, to Rs. 199185.23 Cr on December 31, 2023. Retail advances increased to Rs. 65041.08 Cr during Q3FY24, a growth of 20.39%. Business banking advances increased by 17.80% to Rs. 16679.75 Cr. As of December 31, 2023, net interest income increased by 8.53%, from Rs.1956.53 Cr in Q3FY23 to Rs.2123.36 Cr in Q3FY24. The bank's total income increased by 32.72% to Rs. 6592.66 Cr. The annualised earnings per share (EPS) reached Rs 16.54 in Q3FY24. The bank's quarterly ROA and ROE were, respectively, 1.39% and 14.80%.

At the end of Q3 FY24, the bank's gross non-performing assets (NPA) was Rs. 4628.79 Cr, or 2.29% of its gross advances. As of December 31, 2023, the Net NPA and Net NPA as a percentage of Net Advances were recorded as Rs. 1284.37 Cr and 0.64%, respectively.

Federal Bank Share Price Target

"We believe the asset quality is likely to stay stable with improvement in profitability. We have incorporated steady provision requirements along with stable growth in the balance sheet and thus expect it to deliver RoA/ RoE of 1.5%/15.4% by FY25E. We reiterate BUY with target price of Rs 169 (based on 1.2x FY25E Adj. BVPS); a potential upside of 18%," said LKP Securities in a report.

Rekha Jhunjhunwala's Stake In Federal Bank

During Q3FY24, Rekha Jhunjhunwala held 72,713,440 equity shares of the bank in her portfolio which is a 3.02 per cent stake in Federal Bank.

Canara Bank

Emkay has released its third-quarter earnings forecasts for Canara Bank, which run from October to December 24. According to Emkay, the brokerage firm anticipates that Canara Bank will post a net profit of Rs. 3,524.5 crore, up 22.3% year on year, and that Net Interest Income (NII) would rise by 0.7 per cent year on year to Rs. 8,656.8 crore during Q3FY24.

Canara Bank is expected to release its financial results for the quarter ended on 31st December 2023 on 24th January 2024.

"This financial year, Canara Bank has achieved solid performance, bolstered by improvements in asset quality and a robust loan book. Expect the bank to post a RoA/RoE of 0.9%/17.6% in FY24E. 12-14% credit growth is anticipated for the entire year. GNPA/NNPA expected to be below 4.5%/1.2%. The bank has improved risk diversification through its well-balanced asset mix and increased emphasis on the retail, agricultural, and MSME ("RAM") sectors. We value the company at 6.6x FY24 EPS to arrive at the target of Rs 538," said HEM Securities in a note.

Rekha Jhunjhunwala's Stake In Canara Bank

During Q3FY24, Rekha Jhunjhunwala held 3,75,97,600 equity shares of Canara Bank in her portfolio which is 2.07% of the total paid-up share capital of the bank.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.