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Systematix Report
Systematix has retained Buy rating on Jana Small Finance Bank Ltd. after it posted its results for the March quarter. The brokerage has revised target price of Rs 520, based on the excess return framework, implying 1.1x / 1.0x FY27E / FY28E price/adjusted book value.
Going forward, sustained execution and consistent delivery on stated metrics will be critical for any meaningful re-rating. The brokerage's estimates do not factor in any potential benefits from the grant of a universal banking license.
Jana Small Finance Bank Q4 Results
Jana Small Finance Bank's reported PAT of Rs 140 crore (+17% YoY), was at the lower end of management's guided range but 32% ahead of our estimates, driven by fasterthan-expected AUM growth, margin expansion, and a positive surprise on credit costs.
Given the bank's track record of under-delivery, the brokerage had built in relatively conservative assumptions versus guidance. AUM growth accelerated to 23% YoY / 9% QoQ, led by sustained traction in the secured portfolio and a sharp recovery in unsecured loans, which recorded their first meaningful QoQ growth after seven quarters of decline.
Secured advances (now ~73% of the book) grew 28% YoY / 9% QoQ, supported by strong momentum in MSME (+23% YoY / 9% QoQ) and affordable housing (+33% YoY / 8% QoQ), along with incremental contribution from newer segments such as gold loans and used vehicles.
Unsecured advances rebounded meaningfully to Rs 9,980 crore (+12% YoY / +10% QoQ), aided by the highest-ever disbursements, indicating a calibrated re-entry into the segment. On the liability side, deposit growth remained healthy at 23% YoY, though the CASA ratio declined 205bps QoQ to 17.9%, largely due to withdrawal of certain government deposits.
Margins improved, with NIM expanding to 27bps QoQ, driven by a 39bps decline in cost of funds, lower interest reversals, and a higher share of unsecured loans.
Credit costs declined sharply by 109bps QoQ to ~2.4%, supported by lower slippage and healthy recoveries. On strategy, management reiterated its intent to re-apply for a universal banking license in the coming quarters, which remains a key medium-term catalyst.
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