J&K Bank: Angel Broking Research Report

The stock of Jammu and Kashmir Bank (J&K Bank) is trading at 0.9x FY2012E ABV vis-à-vis its historic range of 0.8-1.4x and median of 1.1x. We maintain our positive view on the stock of Jammu and Kashmir Bank (J&K Bank) considering the bank’s strong deposit mix, dominant regional market share and healthy track record in asset quality. We believe that this provides sufficient margin of safety from the risks of political disturbances in J&K, especially in light of the bank’s steady performance even during past crises. Even taking into account the inherently lower-than-national average growth (in GDP, deposits, credit) in J&K, at just 0.9x FY2012E P/ABV and with sustainable RoEs of at least 17%, the stock is inexpensive. Hence, we maintain a Buy on the stock, with a target price of Rs 987, implying an upside of 33% from current levels