Buy Jammu and Kashmir Bank; target of Rs 135: Prabhudas Lilladher

Prabhudas Lilladher's research report on Jammu and Kashmir Bank

JKBK’s 2QFY18 performance was better than expected on back of decent NII growth as loan growth improved driving up NIMs and also relatively lower provisioning cushioning earnings. Asset quality was largely stable and bank continued its stance to improve balance sheet by maintaining PCR at 60%. Much positive was the loan growth improvement led by J&K state portfolio which are also margin accretive. According to the management, overall risk to the J&K restructured book remains much limited and focus remains on driving loan growth in J&K state.

Outlook
We believe, better PCR, improving NIMs and recovery loan growth augurs well for improvement in earnings over the next 3 years and hence we retain BUY with revised TP of Rs135 (up from Rs110) based on 1.6x Sep‐19ABV. For all recommendations report, click here

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