Risk-reward 'less favourable' for this Jhunjhunwala stock post Q4 earnings; buy or sell?

Shares of private sector lender Federal Bank slipped from their record high after the lender announced its Q4 earnings. Brokerage JM Financial has downgraded the stock to 'reduce' from 'Add' with price target unchanged at Rs 290. It believes the risk-reward has turned less favourable for the stock. 

"We continue to build in 15% loan CAGR over FY26–28E but given the average 11%/1.2% RoE/RoA versus current valuation of 1.4x FY28E BVPS, we see limited room for further re-rating from current levels, said JM Financial. The brokerage values it at an unchanged 1.4 times FY28E book value per share (BVPS).

In the current session, shares of Federal Bank fell 1.16% to Rs 281.40. With today's fall, the stock has given up the record high of Rs 301 reached on April 29. Market cap of the bank stood at Rs 69,277 crore. Total 1.10 lakh shares of the bank changed hands amounting to a turnover of Rs 3.11 crore. 

Rekha Rakesh Jhunjhunwala, wife of late investor Rakesh Jhunjhunwala, held 5.90 crore shares or 2.42 per cent stake in the private lender at the end of March 2026 quarter.

The lender reported a 22 percent rise in consolidated net profit for the quarter ended March, led by stronger core earnings. The Kochi-based bank reported a net profit of Rs 1,259.1 crore in Q4 against Rs 1,030.2 crore in the prior corresponding period. The bank announced a dividend of Rs 1.20 per equity share of face value Rs. 2 each (60 percent) for the financial year 2025-26.