Prabhudas Lilladher is bullish on Jammu and Kashmir Bank has recommended buy rating on the stock with a target price of Rs 76 in its research report dated January 14, 2019.
Prabhudas Lilladher's research report on Jammu and Kashmir Bank
JKBK's earnings of Rs1.03bn (PLe:1.07bn) were in-line with expectations as provisions were flattish as envisaged on back of provisions on IL&FS exposure. Core opearting performance was encouraging with beat from NII which grew by 13% as bank booked some interest back on impaired assets helping NIMs improvement. Bank's J&K state restructured which has been the point of concern can be fully upgraded in Dec'19 but has been performing well and management expects no slippages. Valuation of 0.5x on Sep-20 ABV is undemanding given the loan growth & margins, liabilties franchise and limited asset quality impact. Even adjusting for some slippages from J&K RSA, valuation remain at comfort levels with only capital being constraint.
Retain BUY with revised TP of Rs76 (from Rs94) based on 0.9x Sep-20 ABV.
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