Market pundits are bullish on the prospects of the J&K Bank based on its undisputed leadership in the J&K state with a market share of 65 percent and growing, high CASA ratio, better yields on advances in the state leading to a NIM of more than 5% in the J&K state business, which is growing. The bank, which was earlier focused on lending to bigger companies mainly in its rest of India portfolio, has been for the last couple of years focused on SME and Retail customers in J&K state who are more profitable and ring-fenced from competition due to higher entry barriers to meet the geographical outreach of the Bank in J&K state.
The Operating Income of the Bank as per the analysts will be further amplified in the current fiscal as the pressure of interest capitalization due to JK Restructured Portfolio is also over now. Additionally to support the robust credit growth, the Board of the Bank has already accorded approval for raising additional Tier I and Tier II capital to the extent of Rs 1600 Cr. The analysts are expecting substantial upside as the share of the bank is still trading at a steep discount to its Book value of Rs 119.