Shares of Jana Small Finance Bank rose over 3 per cent on Tuesday as brokerage see nearly 45 per cent upside potential from the previous close of ₹415.15. Nuvama Institutional Equities initiated coverage on the stock with buy rating at a target price of ₹600, cheering the attractive valuations, expected stability in return ratios and better asset quality.
Nuvama analysts expect its gross loan book to clock 21 per cent CAGR over FY24–27, with 80 per cent jump in the share of secured loans by the end of FY27 from 68 per cent, in line with the management’s guidance.
Over six years, the bank has undergone a significant transformation including a shift towards a balanced and secured retail loan book, reshaping microfinance book, enhancing deposit base and advancing technological capabilities.
For FY25, opex is expected to remain elevated due to incremental efforts for collection. However, according to Nuvama, it is likely to ease from FY26 on account of moderation in collection cost and increasing operating efficiency. Moving towards secured loans will also restrict slippages and eventually credit cost.
However, credit cost is expected to remain high in FY25 amid industry-wide stress in the MFI segment.
The brokerage estimates bank’s net revenue and net profit to clock 19 per cent and 13 per cent CAGR over FY24–27. The net interest margin (NIM) is expected to moderate a tad due to declining share of high yielding unsecured loan portfolio.
It is expected to be 7.3 per cent or 7.2 per cent in FY26-27.
The stock traded 3.31 per cent positive on the NSE at ₹428.90 as at 11.31 am, after hitting a high of ₹416.
By the end of March 2025, the bank opened its first branch in Andhra Pradesh in Guntur.
Published on April 8, 2025
