ICICI Securities Initiates Coverage on Jana Small Finance Bank with a Buy Rating and Price Target of Rs 535
Jana Small Finance Bank Reports Strong Q4FY26 Results
Jana Small Finance Bank (Jana) has reported a strong fourth quarter (Q4) of fiscal year 2026 (FY26) with a return on assets (RoA) of 1.3% and return on equity (RoE) of 13%. This performance meets the management's guidance and marks a significant improvement in the bank's fee and revenue front, driven by a recovery in the unsecured portfolio. Additionally, credit costs have receded due to a decline in the stress portfolio, primarily attributed to sectoral recovery in microfinance institutions (MFI).
Key Highlights of Jana's Q4FY26 Results
| Metric | Q4FY26 | Q4FY25 |
|---|---|---|
| Return on Assets (RoA) | 1.3% | 1.1% |
| Return on Equity (RoE) | 13% | 11% |
| PAT Growth | N/A | N/A |
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We expect Jana's return ratios to remain upbeat in the upcoming fiscal year 2027 (FY27) after a challenging FY26. Our forecast indicates a significant PAT growth of more than 90% in FY27E, driven by a low base in FY26. For FY27E, we project a RoA of 1.2% and RoE of 13%.
Outlook and Recommendation
Based on our analysis, we maintain a BUY rating for Jana Small Finance Bank with a revised target price (TP) of INR 535, valuing the stock at 1.1x FY27E price-to-adjusted book value (P/ABV). This revised valuation reflects an increase from our earlier target price of INR 480 and P/ABV of 1.0x.
Investor Takeaway
Investors should consider buying Jana Small Finance Bank with a target price of Rs 535.
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