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Last Updated : Apr 18, 2019 11:56 AM IST | Source: Moneycontrol.com

Rakesh Jhunjhunwala reduces stake in Federal Bank; muted Q4 on cards?

Rakesh Jhunjhunwala holds additional stake of 2.29 percent in his name, which has been kept constant on a sequential basis

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Billionaire investor Rakesh Jhunjhunwala has cut stake in Federal Bank marginally, according to latest shareholding data declared by the private lender on exchanges.

Rakesh Jhunjhunwala, as a partner of RARE Enterprises, sold nearly 12.50 lakh shares of the bank in the March 31-ended quarter, according to an exchange filing. That cuts his stake in the mortgage lender by 0.06 percent to 1.10 percent from 1.16 percent in the December quarter.

Rakesh Jhunjhunwala holds additional stake of 2.29 percent in his name, which has been kept constant on a sequential basis. He increased the stake in Federal Bank from 1.74 percent to 2.29 percent in the September quarter.

The stock has not done much despite stable results in the December quarter. It is only up a little over 5 percent on a year-to-date basis.

Federal Bank reported a rise of 28 percent (year-on-year) in its net profit for the December quarter at Rs 333.63 crore from Rs 260 crore last year.

The Kochi-based lender also posted a growth of 13 percent (YoY) in its net interest income to Rs 1,077.3 crore against Rs 950 crore posted last year. Net interest income is the difference between interest earned and interest given.

The gross NPA ratio rose marginally to 3.14 percent from the previous quarter’s ratio of 3.11 percent. Meanwhile, the net NPA ratio stood at 1.72 percent versus 1.78 percent in the previous quarter.

Does the stake sale mean that the bank could report muted Q4 or March quarter numbers which are scheduled to be announced on May 4?

Analysts estimates tell a different tale. Motilal Oswal, which maintained its buy rating on the Federal Bank, expects net profit to more than double on a YoY basis to Rs 353 crore.

“We expect Federal Bank to report loan growth of ~21 percent YoY (5 percent QoQ), aided by renewed focus on corporate growth. Traction in SME and retail loans would be maintained. We expect NIM to be 3.2 percent for the quarter aided by MCLR re-pricing and lower interest reversal,” said the Motilal Oswal note.

“Other income is likely to grow at a healthy rate of 18 percent on a YoY basis aided by strong fee income. We expect PPoP growth of ~27 percent YoY, significantly higher than opex growth of 14 percent YoY,” it said.

Motilal expects slippages to moderate during the quarter with most of the dispensation from Kerala floods being recognised.

Edelweiss Securities sees over 150 percent rise in YoY net profit to Rs 371 crore. The net interest income and other income, together, are likely to increase 23 percent YoY basis to Rs 1,535 crore.

“Business momentum is likely to be steady though the impact of management transition needs to be evaluated. Asset quality should likely be steady,” said the note.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Apr 18, 2019 11:56 am
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