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UGRO Capital Acquires Profectus Capital in Ambitious ₹1,400 Crore Deal
Equities, Markets, Research, Result Updates - January 22, 2025

Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Company Name: Jana Small Finance Bank Ltd | NSE Code: JSFB| BSE Code: 544118 | 52 Week high/low: 761 / 364 | CMP: INR 430 | Mcap: INR 4,509 Cr | P/BV – 1.25

Abouth the stock
➡️Jana SFB is leading small finance bank engaged in providing MSME loan, affordable housing loan, 2W loan, gold loan, Micro LAP etc. Jana SFB has rapidly expanded network with 778 banking outlet including 252 outlet in unbanked rural centres, in 22 states/ 2UTs while serving 4.6 Mn active customers.

Robust Advance growth thanks to secured book
➡️Jana’s total advance book grew 18.5% YoY (+6% QoQ) to 27,984 Cr thanks to the secured book. Secured book at 68% of the Jana total book report a growth of 35.8% YoY (+11.9% QoQ) to 19,085 Cr while Unssecured book down at 6.90% YoY and de-growth 4.80% QoQ to 8,899 Cr. Secured book contribution jump from 60% in Q3FY24 to 68% in Q3FY25 and management further planning to increased its weight in overall book.

➡️Healthy growth of secured book attributed to affordable housing (up 39.1% YoY) and Micro LAP (up 22.5% YoY) segment. This both combines cross the milestone of 11,000 Cr. 2W and gold loan also report a sound growth of 108.8% and 127.9% YoY but have low weightage in overall book. MSME and term loans to NBFCs grew 15.5% YoY and 33.4% YoY respectively.

➡️Deposit growth higher than advance growth at 24.4% YoY to 25,865 Cr while CASA as % of total deposit decline to 18.4% in Q3FY25 vs 18.8% in same quarter previous year.

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Advance  27,984 22806.96 18.50% 26304.96 6%
Secured  19,085 12252.57 35.80% 16813.89 11.90%
Unsecured 8,899 9513.031 -6.90% 9326.152 -4.80%
Deposit 25,865 19553.94 24.40% 24752.81 4.30%

NII grew single digit on solid advance growth while NIMs contact
➡️Interest income grew 13% YoY and remain flat on QoQ to 1,177Cr led by solid secured book growth while yield down 10 bps YoY (+20 bps QoQ) to 17.4%.
➡️NII grew 8% YoY to 593 Cr with support of advance growth while CoF expand and NIMs decline. On QoQ NII remain flat led to modest growth of book on QoQ and NIMs contraction.
➡️PPOP report -5% YoY and -7% to 279 Cr due to higher operating expenses. PAT down 18% YoY and sequentially 14% to 111 Cr led by higher provision growth.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  1,177 1,038 13% 1,166 1%
Interest expenses 585 490 19% 572 2%
NII 593 548 8% 594 0%
Other income  177 140 27% 176 1%
Total Net income 770 688 12% 770 0%
Employee expenses 309 245 27% 296 5%
Other OpEx 181 148 22% 175 4%
Total Opex  491 393 25% 471 4%
PPOP 279 295 -5% 299 -7%
Provision 174 161 8% 210 -17%
PBT 105 135 -22% 89 18%
Tax expenses  5 0 -8 -167%
Tax rate  5% 0% -9% -156%
PAT  111 135 -18% 97 14%
PAT% 8% 11% -29% 7% 13%
EPS 10.49 18.3 -43% 9.28 13%
No. of equity shares  10.47 7.36 42% 10.45 0%

Asset quality tempered on YoY basis
➡️Jana asset qaulity has been decline due to the stress in the MFI segment. GNPA/NNPA jump 65 bps/24 bps YoY while on QoQ down 15/4 bps 2.71%/0.91%. Net NPA has 82% secured loan which signifies higher chances of recovery.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 2.71 2.06 65 2.86 -15
NNPA 0.91 0.67 24 0.95 -4

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.25 price to book value and book value per share stood at 342 Rs. Yield decline 10 bps YoY (+20 bps QoQ) to 17.4% while CoF jump 40 bps YoY and down 5 bps on QoQ to 8.03%. Yield contraction is led by competitive environment and challenges in MFI segment while CoF expansion driven by increase in deposit rate for attracting retail deposit. This result in decline in NIMs by 30 bps YoY and 10 bps QoQ to 7.6%. Return ratio dissapoint as ROE and ROA down by 670 bps and 20 bps YoY. Company’s capital position remain solid with 18.4% Capital adequacy ratio.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
Yield 17.4 17.5 -10 17.2 20
CoF 8.03 7.64 39 8.08 -5
NIMs 7.6 7.9 -30 7.7 -10
ROA 1.5 1.7 -20 1.2 30
ROE 13.5 20.2 -670 10.2 330
PCR 66.9 6690 67.2 -30
CAR 18.4 16.3 210 18.8 -40
CASA 18.4 18.8 -40 20.1 -170

Management Guidance for FY25
➡️Management expect overall 20% growth in AUM and deposit in FY25.
➡️PAT growth of 30%-40% in FY25 will led by advance and disbursal growth.
➡️ROA and ROE maintained at 1.8% -2% and 19%-21% respectively. Company will continue to increase the secured business led to decline in NIMs.

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Equities, Markets, Research, Research Reports, Result Updates - October 22, 2024

Jana SFB Q2FY25: Secured Growth Drives Advances, Profit Declines Amid MFI Stress

Jana SFB Q2FY25: Secured Growth Drives Advances, Profit Declines Amid MFI Stress

Company Name: Jana Small Finance Bank Ltd | NSE Code: JSFB| BSE Code: 544118 | 52 Week high/low: 761 / 365 | CMP: INR 510 | Mcap: INR 5,352 Cr | P/BV – 1.49

About the stock
➡️Jana SFB is leading small finance bank engaged in providing MSME loan, affordable housing loan, 2W loan, gold loan, Micro LAP etc. Jana SFB has rapidly expanded network with 776 banking outlet including 261 outlet in unbanked rural centres, in 22 states/ 2UTs while serving 4.5 Mn active customers.

Robust Advance growth thanks to secured book; Disbursement slowdown
➡️Jana’s total advance book grew 17.3% YoY (+2.5% QoQ) to 26,411 Cr thanks to the secured book. Secured book at 65% of the Jana total book report a growth of 28.6% YoY (+7.4% QoQ) to 17,063 Cr while Unsecured book moderate at 1% YoY and de-growth 5.4% QoQ to 9,348 Cr. Secured book contribution jump from 56% in Q2FY24 to 65% in Q2FY25 and management further planning to increased its weight in overall book.
➡️Healthy growth of secured book attributed to affordable housing (up 43.3% YoY) and Micro LAP (up 24.2% YoY) segment. This both combines cross the milestone of 10,000 Cr. 2W and gold loan also report a sound growth of 95% and 80% YoY but have low weightage in overall book. MSME and term loans to NBFCs grew 16.5% YoY and 3% YoY respectively.
➡️Disbursement growth modest at 0.3% YoY and 3.3% QoQ to 8,457 Cr due to MFI challenges.
➡️Deposit growth higher than advance growth at 31% YoY to 24,808 Cr while CASA as % of total deposit remains flat.

Book Growth (As on)  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%)
Advance  26,411 21,842 17.30% 25,751 2.50%
Secured  17,063 12,183 28.60% 15,800 7.40%
Unsecured 9,348 9,255 1.00% 9,853 -5.40%
Disbursement  8,457 8,432 0.30% 8,178 3.30%
Deposit 24,808 17,118 31% 23,667 4.60%

NII Soar on solid advance growth while NIMs contract
➡️Interest income grew 19% YoY and remain flat on QoQ to 1,166 Cr led by solid secured book growth while yield down 30 bps YoY (-90 bps QoQ) to 17.2%. NII grew 13% YoY to 594 Cr with support of advance growth while CoF expand and NIMs decline. On QoQ NII down 3% led to modest growth of book on QoQ and NIMs contraction. PPOP report 6% YoY while decline 16 QoQ to 299 Cr due to lower other income. PAT down 21% YoY and sequentially 43% to 97 Cr led by higher provision growth.

All figures are in Cr 

Years  Q2FY25 Q2FY24 YoY (%) Q1FY25 QoQ (%) Commentry
Interest income  1,166 979 19% 1,167 0%
Interest expenses 572 453 26% 557 3%
NII 594 526 13% 610 -3% Healthy advance lead growth, NIMs contract
Other income  176 164 7% 189 -7%
Total Net income 770 690 12% 799 -4%
Employee expenses 296 239 24% 278 6%
Other OpEx 175 168 4% 165 6%
Total Opex  471 407 16% 443 6%
PPOP 299 283 6% 356 -16% QoQ decline due to 30 bps decline in NIMs
Provision 210 160 31% 196 7%
PBT 89 123 -28% 160 -44%
Tax expenses  -8 0 -10 -20%
Tax rate  -9% 0% -6% 44%
PAT  97 123 -21% 170 -43% Higher provision degrowth PAT 
PAT% 7% 11% -33% 13% -42%
EPS 9.28 16.73 -45% 16.27 -43%
No. of equity shares  10.45 7.35 42% 10.45 0%

Asset quality tempered on stress in MFI segment
➡️Jana asset quality has been decline due to the stress in the MFI segment. GNPA/NNPA jump 55 bps/13 bps YoY and 35 bps/remain flat QoQ to 2.86%/0.95%. Net NPA has 82% secured loan which signifies higher chances of recovery. Company has already done strong PCR for all business, PCR up 230 bps YoY (+450 bps QoQ) to 67.2%.

Asset Quality Q2FY25 Q2FY24 YoY (bps) Q1FY25 QoQ (bps)
GNPA 2.86 2.31 55 2.51 35
NNPA 0.95 0.82 13 0.95 0

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.49 price to book value and book value per share stood at 342 Rs. Yield decline 30 bps YoY (-90 bps QoQ) to 17.2% while CoF jump 60 bps YoY and remain flat on QoQ to 8%. Yield contraction is led by competitive environment and challenges in MFI segment while CoF expansion driven by increase in deposit rate for attracting retail deposit. This result in decline in NiMs by 20 bps YoY and 30 bps QoQ to 7.7%. Return ratio disappoint as ROE and ROA down by 500 bps and 40 bps YoY. Company’s capital position remain solid with 20.1% Capital adequacy ratio.

Key metrics  Q2FY25 Q2FY24 bps Q1FY25 bps
Yield 17.2 17.5 -30 18.1 -90
CoF 8 7.4 60 8 0
NIMs 7.7 7.9 -20 8 -30
Credit Cost 1.86 2.33 -47 186
ROA 1.2 1.6 -40 2.1 -90
ROE 14.5 19.5 -500 18.8 -430
PCR 67.2 64.9 230 62.7 450
CAR 18.8 17.5 130 19.3 -50
CASA 20.1 20.5 -40 20.4 -30

Management Guidance for FY25.
➡️Management expect overall 20% growth in AUM and deposit in FY25.
➡️PAT growth of 30%-40% in FY25 will led by advance and disbursal growth.
➡️ROA and ROE maintained at 1.8% -2% and 19%-21% respectively. Company will continue to increase the secured business led to decline in NIMs.

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