Prabhudas Lilladher is bullish on Jammu & Kahmir Bank and has recommended buy rating on the stock with a target of Rs 125 in its November 15, 2015 research report.
Prabhudas Lilladher’s research report on Jammu & Kashmir Bank
J&K Bank's (JKBK’s) reported earnings of Rs1.95bn (PLe: Rs2.02bn) saw a growth of 14% YoY and was mainly supported by lower provisions & higher other income. Core performance remains weak with flat NII growth as loan growth still remains muted despite improvement in margin profile. Margin profile improved by 10bps QoQ to 4.02% on back of increased CD ratio to 73% (up 370bps QoQ). Asset quality remained stable on lower slippages & higher recoveries.
Outlook and Valuation
The bank has completely provided for the fraud account on total exposure of Rs6.8bn, while has also provided Rs520mn of contingent provisions during the quarter. Risk from non‐J&K corporate book still remains high but bank maintains cautious stance on non‐J&K state lending and is optimistic on business growth in FY17. We maintain our ACCUMULATE rating with PT of Rs125.
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