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Want to book 65% profit in share market? Here is the stock you can bet upon, advise experts
Jammu & Kashmir Bank operating performance was above market estimates as margin improved by 22bp QoQ due to higher credit yield.
The Indian indices have been trading sideways for last two trading sessions and hence traders are skeptical about the further move of the markets as any breach and sustainability in 10950 levels of Nifty can boost the markets to move for 11200 levels while a slip below the 10690 can further pull-down the markets. So, rather going with sentiments, experts are advising to chose stocks having strong fundamentals. On account of that they ae advising J&K Bank share whose current price is around Rs 41. They are predicting 65 per cent appreciation in this stock in long-terms perspective as the bnk has registered 43 per cent growth YoY recently.
Commenting upon the expected move of J&K Bank Rakesh Kumar, Analyst at Elara Securities told in a written statement, "Jammu & Kashmir Bank (JKBK IN) operating performance was above market estimates as margin improved by 22bp QoQ due to higher credit yield. Moreover, lower-than-expected provisions and higher operating profit beat led to significantly higher net profit of Rs 1.07bn versus our estimates of Rs 0.17bn. On the balance sheet front, credit grew by 12 per cent YoY while deposits witnessed growth of 18 per cent YoY. Within deposits, the rest of India’s (RoI) term deposits grew at an average 48% over the past two quarters, and we believe that such a continued phenomenon will result in increased cost of funds over the long term." He said that JKBK has exposure worth ~INR 13.5bn to stress-laden IL&FS Group, of this, the bank has reclassified exposure as sub-standard in Q3FY19, and this resulted in higher slippages at Rs 10.3bn (past two quarters average at Rs 5.1bn), and, as a consequence, both GNPA and NNPA saw a sharp uptick. However, despite higher credit cost, coverage ratio at 66 per cent was close to its past four-quarters average at 68 per cent.
"KBK’s low-cost deposit franchise, high yielding credit and thereby high margin suggests strong core operating profitability. At 0.43x one-year forward P/ABV (one-year average at 0.66x), valuation is close to one-year low, which is compelling and offers significant risk-reward opportunity. We expect ROE and ROA of 7.3% & 0.4% and 15.7% & 0.9% in FY19E and FY20E, respectively," said Rakesh Kumar of Elara Securites. He recommended market investors can buy the stock for a target of Rs 65.
Standing in sync with Elara Securities views; Simi Bhaumik, Technical Equity Analyst (Offficially registered with SEBI) told Zee Business online, "Technically the J&K Bank strip looks strong in long-term perspective. In short-term, the stock has moved from Rs 39 levels to Rs 41 levels. If it breaks the Rs 41-42 levels, it can move for its another resistance at Rs 48. After breaking this level and sustaining above that, one can expect the Rs 65 target." She advised the market investors to maintain a stop loss below Rs 35 if any investor is going to buy this stock.
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