Jhunhunwala hikes stake in this PSU bank; stocks down 13% YTD; check targets & Q4 preview

Marquee Dalal Street investor Rekha Jhunjhunwala, wife of late Rakesh Jhunjhunwala, has increased her holding in state-run lender Canara Bank in the March 2025 quarter. The latest shareholding pattern shared by the lender suggests that Jhunjhunwala has bought as many as 37.5 lakh equity shares of the PSU bank during the January-March 2024 period.

According to the exchange filing by the lender, Rekha Jhunjhunwala owned 13,24,43,000 equity shares or 1.46 per cent stake in Canara Bank as of March 31, 2025. However, her holding in the (by the name of Estate Of Late Mr Rakesh Jhunjhunwala) stood at 12,86,93,000 equity shares on December 31, 2024.

Jhunjhunwala's stake in the Canara Bank is valued at Rs 1,190 crore as on Tuesday. The PSU lender rose 2.95 per cent on Tuesday to Rs 89.67, commanding a total market capitalization of more than 81,000 crore. The stock had settled at Rs 87.10 on Monday, down nearly 13 per cent on a year-to-date (YTD) basis.

The stock has crashed nearly 33 per cent from its 52-week high at Rs 129.35, hit a year ago. The stock tested its 52-week high low of Rs 78.58 last month. Shares of Canara Bank were at sub Rs 16-level about 5 years ago and the stock has zoomed about 450 per cent from those levels.

Kotak Institutional Equities expects the bank to report a modest 2 per cent YoY earnings growth, led by a modest 4 per cent YoY growth in operating profit. NIM is expected to see a modest sequential decline, driven by a marginal increase in the cost of deposits.

"We do not expect any major surprises related to asset quality in this quarter. As the net NPL ratio is still higher than other PSU banks under our coverage, credit cost is likely to be higher than most peers," Kotak added, which has an 'add' rating on the stock with a target price of Rs 105.

Motilal Oswal estimates PSU banks to report modest earnings growth of 4.5 per cent YoY (up 4.8 per cent QoQ) amid a slight decline in NIMs, offset by contained opex and a pick-up in other income. NII is likely to see a modest growth of 2.8 per cent YoY as NIM bias remains negative. We estimate PSU banks to report a 9% CAGR in aggregate earnings over FY25-27, it said.

Antique Stock Broking and Ventura Securities have a 'buy' rating on Canara Bank and with a target prices of Rs 120 and Rs 143, respectively, while JM Financial has a 'hold' rating on the stock with a target price of Rs 110.