Federal Bank shares: Jhunjhunwala stock gains as advances up 20.9% in Q1

Shares of Federal Bank climbed 4 per cent in Tuesday's trade after the Rekha Jhunjhunwala-backed private bank reported a 20.9 per cent year-on-year (YoY) surge  in gross advances in the December quarter.

In its June quarter update, the bank said its gross advances grew 20.9 per cent to Rs 1,86,593 crore on June 30 from Rs 1,54,392 crore in the year-ago period. As per internal classification, retail credit book grew 20.2 per cent and wholesale credit book grew 21.6 per cent, Federal Bank said adding that retail-to-wholesale ratio stood at 54:46.

Federal Bank said total deposits reached Rs 2,22,513 crore, with a growth of 21.4 per cent over Rs 1,83,355 crore as of June 30, 2022.

Following the development, the stock rose 3.88 per cent to hit a high of Rs 132.50 on BSE. The average share price target on the stock at Rs 165, as per Trendlyne, suggests a 25 per cent potential upside. Rekha Jhunjhunwala held 2.31 per cent stake in the bank as of March 31. That stake amounted to Rs 644 crore at the prevailing market price.

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The RBI recently approved the appointment of A P Hota, Independent Director, as Part Time Chairman of the bank with effect from June 29, 2023, till January 14, 2026.

Hota is not related to any other director or key managerial personnel of the bank.

Analysts believe the bank’s focus on risk-adjusted margins coupled with controlled slippages and higher recoveries will support stable asset quality going ahead.

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