Scripscan:Jammu and Kashmir Bank Ltd
cmp:750
Code:532209
Story:The Jammu & Kashmir Bank Limited provides various banking products and services principally in India. It offers deposit products and services, including saving bank deposits, term deposits, demand deposits, and current accounts, as well as value added schemes and gift check schemes. The bank also provides home finance, education finance, automobile finance, consumer loans, finance to small businessmen, personal loans to pensioners, mortgage loans for trade and service sector, loans against mortgage of immovable property, fair price shop schemes, and finance to travel and tourist taxi operators, as well as other specialized finances. In addition, it offers tax products and planning services; life and non-life insurance agency services; and non resident banking services, as well as distributes mutual fund products.As of March 31, 2011, the company operated 548 branches and 361 ATMs in 20 states and 1 union territory. The stock is trading at 0.9x FY2013E ABV vis-à-vis its historic range of 0.8-1.4x and five-year median of 1.0x. Immediate levers in the form of increased CD ratio from the current low of 59.5% into higher yielding advances are likely to provide near-term higher momentum to NII growth for the bank relative to other mid-size banks. Further, with 38.2% CASA ratio, the bank is more favorably placed than its peers to handle NIM pressures from high deposit rates. On the flip side, a potential move to increase savings deposit rates would impact the bank significantly.Also, the bank’s increasing non-J&K exposure on the asset side poses medium-term concerns.Being amongst the highest outperformers since December 2010,I believe in relative terms, the stock is now fairly priced.
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