Jana Small Finance Bank shares hit 20% upper circuit; here’s why

Shares of Jana Small Finance Bank surged as much as 20% to hit a 52-week high of ₹599 apiece on the BSE amid a report that the county’s fourth largest small finance bank is planning to apply for the universal bank license by May-June 2025. 

Early today, shares of Jana Small Finance Bank opened higher at ₹560, up 12.1%, as against the previous closing price of ₹499.20. The stock ended higher at ₹599, with the market capitalisation of ₹6,264.96 crore. As many as 4.21 lakh shares exchanged hands on the BSE, as against the two-week average of 0.32 lakh shares. The small finance bank hit a 52-week low of ₹365 on February 14 this year. The stock made its market debut on February 14, listing at a 4.35% discount of ₹396 apiece on BSE, as against its issue price of ₹414 per share.

The development comes after the Reserve Bank of India, on April 26, released a circular regarding the transition of small finance banks to universal banks. As per the RBI guidelines, the small finance bank should have a minimum net worth of ₹1,000 crore at the end of the previous quarter and should have GNPA (gross non-performing asset) and NNPA (net non-performing asset) of less than or equal to 3% and 1%, respectively.

In the January to March quarter of FY24,  Jana Small Finance Bank’s GNPA improved to 2% as against 3.6% in the corresponding period of the previous fiscal year. Its NNPA also improved to 0.5% during the quarter under review as against 2.4% in the March quarter of FY23. The  standalone net worth of the lender stood at ₹3,577 crore at the end of the March quarter, which exceeds the minimum requirement set by the central bank.

In the fourth quarter ended March 31, 2024, the bank’s profit after tax (PAT) stood at ₹670 crore, up 162% year-on-year, as against ₹256 crore in the corresponding period of the previous year. The CASA deposits of the country’s fourth largest small finance bank stood at ₹4,447 crore, witnessing a growth of 35% year-0n-year. The bank’s CASA ratio stood at 20% as of March 2024.

“Our transformation to a customer-led franchise serving aspirational India is showing strong acceptance and success. We continue to focus on meeting the needs of the underserved, from deposits to loans, with the optionality of fully digital processes across all products. Our risk diversification has resulted in 60% of our loan book being classified as secured, primarily in the Home Loan and Loan Against Property (LAP) products. We foresee a huge opportunity for our business model and will strive to continue on this path with high standards of governance and customer service,” says Ajay Kanwal, MD & CEO, Jana Small Finance Bank.