Jana Small Finance Bank (JSFB), since inception has focused on financial inclusion by serving underserved and unbanked populations in India. It evolved from an NBFC to an NBFC-MFI, then to a small finance bank, and became a scheduled commercial bank in 2019.
It has the scale to achieve sustainable profitability given focus on stronger deposit mobilization, its changing loan mix towards secured lending, better operating leverage and normalization of credit cost amid better asset quality. This will help JSFB maintain a RoA of 1.7–1.9% in FY26E-FY27E. Given the attractive valuations, expected stability in return ratios and better asset quality, we initiate coverage with a ‘BUY’ rating and a TP of INR600 with an upside of 43%