Banking stock with zero promoter stake trading near record high; what should investors do?

Shares of private sector lender Federal Bank Ltd are trading near their record high. The banking stock touched an all-time high of Rs 159.25 in the previous session. However, the stock saw partial profit-booking and closed 2.76% lower at Rs 153.10 on Wednesday.

Rekha Rakesh Jhunjhunwala, wife of late investor Rakesh Jhunjhunwala, held 4.82 crore shares or 2.01 per cent stake in the private lender as on October 11, 2023. Data showed 2.45 crore shares or 1.02% were displayed as stake in the name of late Rakesh Jhunjhunwala. On the other hand, promoters had zero stake in the bank.

Market cap of the lender declined to Rs 37,233 crore on BSE.

Federal Bank stock has risen 13.49% in one year and gained 11.22% since the beginning of this year.

Brokerage Nirmal Bang has assigned a target price of Rs 182 to the stock.

“We have rolled forward our valuation to FY26E and continue to maintain ‘BUY’ rating on Federal Bank with a revised target price (TP) of Rs 182 (valued at 1.25x Dec. 2025E ABV plus subsidiary value per share of Rs13.10) as against Rs176 (valued at 1.25x Sept. 2025E ABV plus subsidiary value per share of Rs13.8). Focus on growing higher yielding book,” said the brokerage.

Abhijeet from Tips2trades said, "IRCTC is bullish but also overbought on the daily charts with next resistances at Rs 895 & Rs 940. Investors should book profits at current levels as daily close below the support of Rs 839 could lead to a target of Rs 760 in the near term."

Total 9.14 lakh shares changed hands amounting to turnover of Rs 14.29 crore on BSE.

In terms of technicals, the relative strength index (RSI) of the stock stands at 53.2, signaling the stock is neither oversold nor overbought. The banking stock has a one-year beta of 0.2, indicating very low high volatility during the period. Federal Bank shares stand lower than the 5 day and 10 day but are trading higher than the 20 day, 50 day, 100 day and 200 day moving averages.

The lender reported better-than-expected earnings for the quarter ended September 2023. Net profit climbed 35.56% to Rs 954 crore in Q2 against the profit of Rs 703.7 crore in the September quarter of 2022. The bank logged highest ever quarterly profit in Q2.

Net interest income came 16.7% higher at Rs 2056.4 in Q2 against Rs 1761.18 crore in September quarter of the previous fiscal. NII too was the highest in the last quarter.

Deposits grew 23% to Rs 2.32 lakh crore in the last quarter against Rs 1.89 lakh crore in the September 2022 quarter. On a quarter on quarter basis, deposits rose 5% from Rs 1.89 lakh crore in Q1 of the fiscal.

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