Prabhudas Lilladher's research report on Jammu & Kashmir Bank
JKBK's earnings was lower than expected on flat NII on higher interest reversals despite loan growth of 10% YoY and lower of cost of funds on better CASA. Asset quality was stable on sale to ARC on slippages from the restructured book largely from non-J&K state. J&K restructured book also saw some slippages on account of RBI divergence noted in few accounts (large borrowal) leading to interest reversals but rest of the book is functioning well and if the same continues bank could likely witness significant addition to NII (7% of loans under J&K restucturing) and if there are any resolutions in IBC referred loan assets
Outlook
We believe, better PCR, improving NIMs and recovery in loan growth augurs well and hence we retain BUY with revised TP of Rs100 (down from Rs112) based on 1.2x Mar-20ABV.
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