Buy this mid-cap bank stock for over 25% return in one year

Portfolio of Rakesh Jhunjhunwala: Federal Bank, the Ace investor backed by Rakesh Jhunjhunwala, has a growth potential of more than 25% thanks to the steady improvement in corporate market share over the past 5 years. Over the past year, the private banker has witnessed a see-saw trade on the stock exchanges and it looks like the time to buy is now. ICICI Securities has assigned a buy rating to the bank.

Rakesh Jhunjhunwala Shareholding

Rakesh and his wife Rekha Jhunjhunwala own lump shares of Federal Bank. However, both wallets are managed by Rakesh. Investor Ace Rakesh Jhunjhunwala, also referred to as the Big Bull of the Indian stock market, owns 75,721,060 shares, which translates to a 3.7% stake in Federal Bank, according to the company’s latest shareholding chart available on the ESB. Rakesh Jhunjhunwala along with his wife Rekha and associates publicly owns 33 shares with a net worth of over Rs 25,970.2 crore as of July 5, 2022, according to a stock analysis website

Federal Bank Finances

The bank, in its first quarter update, said gross advances rose by around 16.3% year-on-year (YoY) to around Rs 1.5 lakh crore. According to the bank’s internal classification, retail credit grew 16.7% year-on-year while wholesale book posted 15.8% year-on-year growth.

“Total deposit base increased by 8.2% year on year to Rs 1.83 lakh crore, total customer deposits increased by 9.1% year on year while CASA increased by 15% year on year. one year, and term deposit growth was 6.1% year-on-year,” the bank said in its regulatory filing. . Overall, Federal Bank saw healthy growth in advances, helped by strong growth at the system level.

The bank’s monthly increase is nearly 10.15%. So far this year, stocks have gained more than 12%.

Should you invest in Federal Bank shares?

Research analysts Renish Bhuva, Kunal Shah and Chintan Shah at ICICI Securities said: “Federal Bank’s (FB) FY22 annual report highlights the expansion of its footprint in the first half of the decade. (2012-22). While the focus was on consolidation, the bank conducted its business with a Branch Light and Distribution Heavy approach and aimed to transform presence into prominence.

According to analysts, now that covid-related uncertainties are easing and competition is increasing, the bank plans to increase its reach in network 2 (ex-South) by more than 25-30% over the next 3 years. The gradual expansion would take place in the new catchment areas. In addition, recently added lines of business such as credit cards, CVs and microfinance are well advanced and poised to contribute significantly to incremental growth in the future. The bank expects to grow at a CAGR of 15-17%, i.e. approximately a 1.5x increase in business, over the next 2-3 years.

Following the above, analysts at ICICI Securities gave Federal Bank a buy rating with a target price of Rs 125 each. Given the July 11 closing price and target price, Federal Bank has the potential to climb more than 25% going forward.

The views and investment advice of the experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before making any investment decision.

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