J&K Bank - Resumption Of Dividend Payout In FY23 After Seven Year Gap Sends Positive Signals: HDFC Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Retail Research .Valuation and recommendation: We expect The Jammu and Kashmir Bank Ltd. to grow its loan book at 13% compound annual growth rate while net interest income and net profit are expected to grow at 11% and 19% CAGR respectively over FY23-25E. Return on average asset is estimated to improve to 1% by the end of FY25E from current 0.9% in Q1 FY24. The asset quality should improve further from here on as collection starts stabilising. J&K Bank is trading at 0.64 times FY25E adjusted book value, which is at a considerable discount to its peers. Looking at the growth opportunities aided by peace and stability in the state, we believe that the discount will gradually narrow. Resumption of dividend payout in FY23 after seven-year gap sends positive signals. We feel that investors can buy the stock of J&K Bank in the band of Rs 73.5-75 (0.64 times FY25E ABV) and add more on dips to Rs 65-66.5 band (0.57 times FY25E ABV). We expect the base case fair value of Rs 81.5 (0.7 times FY25E ABV) and the bull case fair value of Rs 87.75 (0.75 times FY25E adjusted book value per share) over the next two-three quarters..Company background: The Jammu and Kashmir Bank was established in 1938 and is headquartered in Srinagar. It offers retail as well as corporate banking along with treasury services. It has a total of 1,001 branches, out of which 833 branches are in the Union Territories of Jammu & Kashmir. The Government of Jammu & Kashmir holds 63% stake in the bank and the bank has been designated by the Reserve Bank of India as the exclusive agent of banking activities related to the Government of J&K and related administrative offices. This designation enables the bank to play a pivotal role in collection of taxes and implementing initiatives of the Government in the UT of J&K as well as Ladakh..Click on the attachment to read the full report:.Combined HDFC Bank Set To Replace Reliance As Top Heavyweight In Nifty 50.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

J&K Bank - Resumption Of Dividend Payout In FY23 After Seven Year Gap Sends Positive Signals: HDFC Securities

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J&K Bank - Resumption Of Dividend Payout In FY23 After Seven Year Gap Sends Positive Signals: HDFC Securities

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