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In a bold move that has caught market watchers’ attention, ace investor Rekha Jhunjhunwala has sharply increased her stake in a leading private sector bank, even as the lender reported a decline in quarterly profit.

The investor’s confidence stands out at a time when many financial stocks are facing pressure from rising provisions and slower loan growth.

According to the latest BSE shareholding data, Jhunjhunwala raised her holding from 3.60 crore shares (1.48 per cent) in the June 2025 quarter to 5.90 crore shares (2.42 per cent) in the September 2025 quarter, marking an increase of 2.3 crore shares, about 64 per cent higher than her previous stake.

The stock under discussion is Federal Bank.

The private lender reported a 9.5 per cent year-on-year decline in consolidated net profit to Rs 991.94 crore for the September 2025 quarter, compared to Rs 1,096.25 crore a year earlier.

The dip came mainly due to higher provisioning, which nearly doubled to Rs 397.44 crore from Rs 196.14 crore in the same period last year.

However, the bank’s core performance remained resilient. Its net interest income (NII) rose 5.4 per cent YoY to Rs 2,495 crore, driven by a 6.23 per cent loan book growth.

The net interest margin (NIM) compressed slightly by 0.06 per cent to 3.06 per cent, indicating margin pressure due to rising funding costs.

The bank maintained healthy asset quality during the quarter. The gross non-performing assets (NPA) ratio improved to 1.83 per cent from 1.91 per cent in the previous quarter and 2.09 per cent a year ago.

The slippage ratio rose marginally to 0.94 per cent, but management noted that it continues to stay below 1 per cent, showing effective risk control.

Deposit growth stood at 7.36 per cent, with management focusing on boosting low-cost CASA (Current Account and Savings Account) deposits to strengthen the balance sheet further.

Adding to investor optimism, the bank’s board recently approved a Rs 6,196 crore capital raise through preferential warrants to Blackstone group entity Asia II Topco XIII Pte. Ltd. at Rs 227 per share.

Once fully converted, Blackstone will own up to 9.99 per cent stake in the bank, highlighting strong institutional faith in the lender’s growth story.

Despite short-term profit pressure, the stock has been a strong long-term performer. It has gained 3.65 per cent in a week, 22.93 per cent in a month, and 27.59 per cent over the past year.

Over five years, the shares have surged 352 per cent, while in 10 years, they have delivered 319 per cent returns.

Anubhav Maurya is a Senior Sub-Editor at Zee Business, focusing on the stock market, personal finance, corporate news, and related sectors.

He has previously worked wi