Rekha Jhunjhunwala Exits Canara Bank Stake After Multibagger Returns
Rekha Jhunjhunwala has exited her Canara Bank position after her stake fell below 1% in the December quarter, ending an investment that began in August 2021. The exit follows strong stock performance with nearly 60% gains over the past year, validating the late Rakesh Jhunjhunwala's bullish PSU banking thesis. Canara Bank delivered robust Q2 FY26 results with strong non-core income and improving asset quality, while the broader PSU banking sector continues to benefit from renewed investor interest and improving fundamentals.
*this image is generated using AI for illustrative purposes only.
Veteran investor Rekha Jhunjhunwala has likely concluded her investment journey in Canara Bank, with her stake falling below the 1% disclosure threshold in the December quarter. This exit marks the end of a profitable chapter in the state-run lender that began in August 2021 when her late husband Rakesh Jhunjhunwala first acquired the position.
Investment Timeline and Performance
The Jhunjhunwala family's involvement with Canara Bank spans over three years, demonstrating a sustained commitment to the PSU banking thesis. The investment timeline shows steady accumulation followed by the recent exit.
| Period | Stake Percentage | Key Development |
|---|---|---|
| August 2021 | Initial Position | Rakesh Jhunjhunwala first acquired stake |
| September 2025 | 1.57% | Marginal increase of 0.1% during the quarter |
| December Quarter | Below 1% | Likely complete exit from position |
The timing of the exit coincides with strong stock performance, as Canara Bank shares rallied nearly 60% over the past year, significantly outperforming several banking sector peers.
Rakesh Jhunjhunwala's PSU Banking Vision
The late ace investor Rakesh Jhunjhunwala was widely recognized for his bullish stance on public sector banks, viewing them as deeply undervalued with significant recovery potential. His investment philosophy centered on PSU banks' strong deposit-gathering capabilities, improving credit cycles, and attractive valuations.
In previous interviews, Jhunjhunwala expressed being "extremely bullish on banks and especially on the so-called inefficient banks," highlighting his confidence in state-run lenders' fundamental strengths and cyclical recovery prospects.
Canara Bank's Recent Financial Performance
The bank's operational performance has validated the investment thesis, with robust results in recent quarters supporting the stock's strong performance.
| Performance Metric | Q2 FY26 Result |
|---|---|
| Net Profit | Beat analyst estimates |
| Non-core Income | Strong contribution |
| Loan Growth | Stable expansion |
| Deposit Growth | Steady increase |
| Asset Quality | Continued improvement |
The bank benefited from treasury income and recovery from written-off accounts, while maintaining stable core business growth across lending and deposit segments.
Broader PSU Banking Sector Outlook
The PSU banking segment has experienced renewed investor interest, supported by multiple positive factors that align with Jhunjhunwala's original investment rationale. Strong credit growth prospects, valuation support, and renewed foreign institutional interest have lifted sentiment across state-run lenders.
Brokerage Incred expects credit costs to moderate in the medium term and views Canara Bank as well-positioned to manage margin compression while continuing asset quality improvements. The broader upcycle in PSU bank stocks has been underpinned by rising credit demand and improving asset quality metrics.
The exit represents a significant shift from a position that exemplified Rakesh Jhunjhunwala's conviction in Indian public sector banks' recovery potential. With institutional backing below the disclosure threshold, market attention will focus on Canara Bank's ability to sustain its performance trajectory independently of this prominent investor endorsement.
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