In the coming days, the banking sector will get the maximum benefit of economic recovery. In such a situation, on this decline, quality bank stocks should be included in the portfolio.
Rakesh Jhunjhunwala Portfolio Stock: There is a situation of uncertainty in the market right now, but experts or brokerage houses are positive about the long term outlook. He says that the recovery in the economy and the growth indicators at the macro level are fine, in such a situation, the market will once again stabilize when the Russia and Ukraine crisis subsides. The banking sector will get the maximum benefit of economic recovery. In such a situation, on this decline, quality bank stocks should be included in the portfolio. If you are also looking for a strong stock, then you can keep an eye on Federal Bank. Brokerage house Axis Securities has included it in its top pick for the month of March. It is also in the portfolio of stock market veteran Rakesh Jhunjhunwala.
in restructuring level control
Brokerage house Axis Securities says the bank’s liability franchisees remain strong. The restructuring level is also under control. Management expects RoA to improve to 1.2 per cent in the next 4 to 6 quarters. At the same time, with the change in loan mix, the NIM expansion may remain 10bps. The bank is creating a loan mix by being cautious towards high rated corporate and retail loans.
Credit cast may come down
According to the brokerage house, there is a possibility of a fall in the credit cast as the bank has extended the provisions. With a 200bps improvement in the cast to income ratio in both the financial years 2023 and 2024, the digital strategy will bring cast benefit to the bank. However, asset quality and loan growth outlook are risk factors.
How much return can I get
According to the report, the best part is that the bank’s focus on retail is increasing. Fee income is strong and capitalization is adequate. Healthy growth is expected in the balance sheet going forward. While recommending investment in the stock, the brokerage house has given a target of Rs 125. The current price of the stock is Rs 96, in this sense it can give 27 to 28 percent return.
Rakesh Jhunjhunwala has faith
Market’s veteran investor Rakesh Jhunjhunwala has confidence in the stock of Federal Bank. According to Trendline data, he did not sell a single share of the bank in the December quarter. He has a 3.7 percent stake in the bank. He held 3.7 per cent stake in the bank in the September quarter. Whereas in the June quarter it was 2.8 percent. He had 2.4 percent stake in the bank till the first two quarters. He currently holds 75,721,060 shares of the company, whose value is 726.2 crores.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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