Buy Jammu & Kashmir Bank; target of Rs 75: ICICI Direct

ICICI Direct's research report on Jammu & Kashmir Bank

Absolute GNPA declined to | 6007 crore vs. | 6232 crore in Q3FY18. This decline along with credit growth at 14.2% YoY led to 12 bps QoQ increase in GNPA ratio at 9.96%. Slippages at | 1747 crore were highest due to four large corporates, RBI divergence of | 570 crore. Net NPA ratio increased 61 bps QoQ to 4.9% (| 2791 crore). Though PCR declined QoQ, it still continued to remain healthy at 65.83%.

Outlook

Focus on high rated corporate and improvement in tourism activity is seen to revive credit growth. Though state government support in lieu of rehabilitated exposure provides comfort, we remain a bit cautious. We revise our target price lower at | 75 (earlier | 90) valuing the stock at 1.1x FY20E ABV. We maintain BUY.