Buy Jana Small Finance Bank; target of Rs 753: Ventura Securities

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26 Aug, 2025 12:21

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Jana Small Finance Bank (JSFB), the fourth-largest Small Finance Bank in India, is strategically pivoting its portfolio towards secured lending products, while systematically decreasing its exposure to microlending. In FY2023-24, JSFB declared its highest ever profit of INR 670 crore along with significant improvement in assets quality. Going forward we expect the high growth trajectory to be retained. We forecast the lending book to grow at 19.8% CAGR to INR 42,583 cr. over FY24-27, while deposits are expecting to grow at a CAGR of 20.0% to INR 39,000 cr. driven by 31.6% growth in CASA deposits and 16.8% growth in term deposits. JSFB has strategically shifted focus towards expanding its secured loan portfolio, which has grown from 40% in FY21 to 60% by FY24. We further expect the lending book’s exposure to reach 80% by FY27. We expect net interest income (NII) to grow at a CAGR of 18.5% to 3,529 cr with the NIM ratio stabilizing around 8.5% (+40 bps). Going forward, the asset quality is expected to deteriorate marginally, with GNPA projected to inch up by 80 bps to 2.9%, and NNPA to inch up by 20 bps to 0.8% by FY27. The bank's RoAA is projected to remain stable at around 2%, while RoAE is expected to moderate to 17.7% over the same period.

Given that JSFB remains poised for sustained growth while reinforcing its leadership in financial inclusion through its innovative and customer-centric digital banking solutions we remain positive on the stock. We initiate coverage with a BUY rating and a price target of INR 753 (1.34X FY27 P/Ad. BV), representing an upside of 33.5% from the cmp of INR 564 over the next 24 months.

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