Rekha Jhunjhunwala likely to leave Canara Bank after taking home the multibagger returns

Veteran investor Rekha Jhunjhunwala is believed to have exited her stake in Canara Bank, marking the end of a profitable chapter in a long investment journey in the state-owned lender. According to the latest stock data for the December quarter, her stake in the bank fell below 1% for the first time, a position that delivered multibagger returns over several years. The data was not publicly available to find out the exact returns that Jhunjhunwalas took home from this investment.Jhunjhunwala’s involvement with Canara Bank dates back to August 2021, when Rakesh Jhunjhunwala first acquired a stake in the bank as part of a broader bullish view on public sector banks (PSBs). At the end of the September 2025 quarter, Rekha still owned around 1.57% of the bank’s share capital, having marginally increased her stake by around 0.1% over the period.

The recent exit comes after the stock posted strong gains, rising nearly 60% over the past year, outperforming several peers in the banking pack.Her late husband, the late ace investor Rakesh Jhunjhunwala, was widely known for his bullish attitude towards PSU banks. He believed these lenders were deeply undervalued and poised to benefit from a cyclical recovery in credit growth and an improvement in asset quality.

In previous interviews, Jhunjhunwala said he was “extremely bullish on the banks and especially on the so-called inefficient banks,” pointing to strong deposit-raising capacity, improving credit cycles and cheap valuations as key reasons for his confidence in government lenders.

Indeed, the broader PSU banking segment has witnessed renewed investor interest in 2025, with strong credit growth prospects, valuation support and renewed foreign interest lifting sentiment among sovereign lenders.

The upward cycle of PSU banking stocks over the years has been supported by rising credit demand and improving asset quality metrics, providing a favorable environment for stocks in the space. In the recent second quarter, Canara Bank posted a robust profit for the second quarter of FY26, with strong contribution from non-core revenues, stable loan and deposit growth and improvements in asset quality.

The bank’s net profit exceeded analysts’ expectations, supported by government bond income and recovery of account write-offs.

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Brokerage Incred expects credit costs to decline over the medium term and sees the bank well positioned to offset margin compression while asset quality continues to improve.

The departure marks a notable shift in a position once emblematic of the late Rakesh Jhunjhunwala’s optimistic view of India’s public sector banks. With ownership now below 1%, attention will turn to how Canara Bank shares perform in the absence of one of its most prominent investors.

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