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Tuesday, October 26, 2021

JhunJhunwala Portfolio: This favorite stock of Rakesh Jhunjhunwala can jump 30 percent, know what is your target price

The share of Federal Bank, which is included in Rakesh Jhunjhunwala’s portfolio, can jump 30 percent from its current level. Many brokerage firms have predicted a tremendous rise in this stock. After COVID-19, there has been a tremendous recovery in the business of this private sector bank. Its gross advance has increased by 9.7 percent as compared to last year. In the same period, the total deposits have increased by 10 percent. This midcap stock has been in Jhunjhunwala’s portfolio since 2016. The share of Federal Bank is currently trading at Rs 84.50. The stock has gained 25 per cent so far this year. Both the brokerage firm Emkay Global and Motilal Oswal have given it a ‘BUY’ rating with different target prices.

Emkay Global- BUY

Target Price – Rs 110
Estimated Growth – 29.5%

According to Emkay Global, Federal Bank is rapidly transforming itself into a new generation bank. It is expanding across all asset, liabilities and payments business through its Neo Banking tie-up. This will also reduce its cost in the long run. The brokerage firm has said that apart from Equitas, Federal Bank is its preferred stock in the small/mid cap segment. The Liability/Asset Quality Profile of the bank is quite good. There is stability in management. The bank is ahead in adopting the digital approach and its return ratio is also expected to improve significantly. The brokerage firm has given it a ‘BUY’ rating with a target price of 110.

Axis Securties – BUY

Target Price – Rs.100
Estimated Growth – 18%

According to Axis Securties, Federal Bank is well positioned due to its good business mix, strong liability franchise, adequate capitalization and well rated loan customer base. The brokerage firm has said that with its increased focus in the retail lending segment, its margins can improve significantly, thereby maintaining high ROA. It has given it a BUY rating with a target price of Rs 100.

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Motilal Oswal– BUY

Target Price – Rs 110
Estimated Growth – 29.5%

Motilal Oswal says that there has been a strong growth in the deposits of Federal Bank for the July-September quarter. Customer deposits have grown by 11 per cent as compared to last year. At the same time, it has increased by 2.5 percent compared to the previous quarter. With this, the bank’s CASA ratio has improved to 36.2 percent. This is the highest CASA ratio of the bank till date. The liquidity coverage ratio of the bank stood at 216 per cent in the previous quarter. But now it has increased to 226 percent. Motilal Oswal has said that its margins may increase in the second quarter of FY 2021-22 as credit trends are recovering and fund cost is also declining. The brokerage firm has given it a BUY rating with a target price of Rs 110.

Jhunjhunwala has 5.47 crore equity shares of Federal Bank, currently its valuation is Rs 465 crore.

(Article: Kshitij Bhargava)

(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)

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Nisha Chawlahttps://www.businesskhabar.com/
She is an expert in Banking, Finance and working with an international bank. She sharing her ideas and knowledge with Business Khabar.
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