Jana Small Finance Bank - Gravitating Towards Secured And Diversified; ICICI Securities Initiates Coverage

ICICI Securities Report

Jana Small Finance Bank Ltd., over the past six years, has undergone a significant metamorphosis – post a change in guard in August 2017 (Mr. Ajay Kanwal joining as CEO).

With revamped management came renewed strategic focus. Jana has its eyes firmly set on:

1. building a diversified secured retail portfolio;

2. calibrating growth in micro-finance, and within this, focusing on rural versus its erstwhile urban-heavy portfolio;

3. a granularised deposit base emphasising on scaling retail deposits; and

4. strengthening its tech capabilities.

Jana’s efforts are bearing fruit – the initial harvest includes:

1. unsecured exposure falling to 38% as of Q1 FY25, from 99% in FY18;

2. CASA + retail deposit base improving to 65% versus 61% in FY20 and

3. credit-deposit ratio improving to 102% versus 148% in FY19.

In parallel, a sharp turnaround in profitability has come about too with RoA improving to 2.4% in FY24 versus an average of ~0.5% over FY20–23 and loss in FY19. Initiating coverage with Add and target price of Rs 630 based on ~1.35 times FY26E adjusted book value.

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