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3rd quarter results of J&K Bank point to ‘positive growth’ in days ahead

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Srinagar, Jan 20:  J&K Bank results for the third quarter has enough indicators to tell the market pundits that the bank is bound to see a positive growth in the coming days, starting this quarter itself.

The bank has exceeded market expectations according to the market experts and numbers are assuring and the script is being strongly recommended for buy with upside potential of 65 percent in the long-term.

As per recommendations by major broking houses like Prabhudas Leeladhar, ICICI Direct, Anand Rathi and Elara Securities, the bank looks strong in long-term perspective.

At the current price the stock is a great investment opportunity to those interested in the stock market.

Commenting upon the expected move of J&K Bank, Rakesh Kumar, an analyst at Elara Securities, said in a written statement that "Jammu & Kashmir Bank (JKBK IN) operating performance was above market estimates as margin improved by 22bp QoQ due to higher credit yield. Moreover, lower-than-expected provisions and higher operating profit beat led to significantly higher net profit of Rs 1.07bn versus our estimates of Rs 0.17bn.

“On the balance sheet front, credit grew by 12 percent YoY while deposits witnessed growth of 18 percent YoY. Within deposits, the rest of India’s (RoI) term deposits grew at an average 48 percent over the past two quarters, and we believe that such a continued phenomenon will result in increased cost of funds over the long term."

He said that JKBK has exposure worth INR 13.5bn to stress-laden IL&FS Group. Of this, the bank has reclassified exposure as sub-standard in Q3FY19, and this resulted in higher slippages at Rs 10.3bn (past two quarters average at Rs 5.1bn), and, as a consequence, both GNPA and NNPA saw a sharp uptick.

However, despite higher credit cost, coverage ratio at 66 percent was close to its past four-quarters average at 68 percent.

Standing in sync with Elara Securities views, Simi Bhaumik, Technical Equity Analyst (officially registered with SEBI) told ‘Zee Business online’, "Technically the J&K Bank strip looks strong in long-term perspective. In short-term, the stock has moved from Rs 39 levels to Rs 41 levels. If it breaks the Rs 41-42 levels, it can move for its another resistance at Rs 48. After breaking this level and sustaining above that, one can expect the Rs 65 target."

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