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One stock made big money for Jhunjhunwala & world’s richest Malayali: Check out how!

A stock that has been delivering over 30 per cent return CAGR to investors since 2013 is among the favourites of one of the wealthiest Indians, Yusuff Ali Musaliam Veettil Abdul Kader, and ace investor Rakesh Jhunjhunwala.

Both the investors like mid-sized lender Federal BankBSE -0.40 %, in which they hold over 2 per cent stake each.

In 2013, Yusuff bought over 3 per cent stake in Federal Bank at around Rs 40 per share. As of May 2, 2017, shares of Federal Bank were trading at Rs 112, indicating a nearly three-fold, or 180 per cent, jump during the period.

As per the latest shareholding data available with BSE, Yusuff held 3.73 per cent stake in Federal Bank.

So, who is Yusuff Ali?

He is an Indian businessman from Nattika in Thrissur district of Kerala and Managing Director of the Abu Dhabi-headquartered EMKE LuLu Group of companies that owns the Lulu Hypermarket chain that operates in West Asia.

The $6.9 billion Lulu Group, ranked as top retailer in the MENA region and listed among the top 50 fastest growing retailers in the world by Deloitte, made headlines in the UK in recent years by acquiring the iconic Scotland Yard building in London and for its investment in luxury retail brand East India Company.

According to reports, Yusuff recently topped richest Malayalees in the latest Forbes billionaire rankings. Yusuff Ali improved his ranking by seven spots from 25th richest Indian in 2016 to 18th in 2017. According to Forbes, his wealth grew from $4 billion to $4.5 billion in last 12 months.

Ravi Pillai, chairman and MD of RP Group of companies established in 1979, is the second richest Malayali with a net worth of $3.5 billion. Ravi Pillai’s wealth rose from $3.1 billion in 2016 to 18th in 2017. According to Forbes, his wealth grew from $4 billion to $4.5 billion in last 12 months.

Ravi Pillai, chairman and MD of RP Group of companies established in 1979, is the second richest Malayali with a net worth of $3.5 billion. Ravi Pillai’s wealth rose from $3.1 billion in 2016 to $3.5 billion in 2017.

As of August 9, 2016, he was the 270th richest in the world.

Rakesh Jhunjhunwala, who was holding 3,88,21,060 shares, or 2.26 per cent, stake in Federal Bank as of September 2016 today holds 2.32 per cent.

Since September 2016, shares of Federal Bank have surged over 56 per cent till May 2, 2017. Market mavens are still bullish on the lender.

Domestic brokerage Sharekhan believes asset quality outlook remains bright for the lender. As overall demand improves in the economy, credit offtake (aided by low interest rates) would continue to be conducive for well-managed players such as Federal Bank. “We maintain buy rating on the stock with a price target of Rs 125,” Sharekhan said in a research note.

Federal Bank reported a 25-times jump in profit for the quarter ended March 31, 2017 on the back of strong growth in interest income and lower provisioning for non-performing assets (NPAs).

For the quarter ended March 31, net profit increased to Rs 257 crore from Rs 10 crore a year ago, while net interest income, or the difference between interest earned on loans and that paid on deposits, increased 23 per cent from a year ago to Rs 842 crore. Provisions dropped 68 per cent to to Rs 123 crore from Rs 389 crore in March 2016.

Siddharth Purohit, Senior Equity Research Analyst for banking at Angel Broking, said: “Federal Bank has come out with a strong set of results for the quarter. Asset quality has shown a remarkable improvement during the quarter. With improving outlook, we believe Federal Bank has the potential for further re-rating. We have a buy rating on the stock.”

Among other stocks, Yusuff also holds 8,91,89,077 shares, or 4.95 per cent, stake in South Indian BankBSE 0.20 % and 88,47,283 shares, or 4.22 per cent, stake in Dhanlaxmi BankBSE 4.14 %.

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