ICICI Securities has maintained its BUY call on Jana Small Finance Bank, lifting the target price to Rs 600 from Rs 535 and implying about 20% upside from the current market price of Rs 498. The brokerage says the lender has made a robust start to Q1FY27, with improving profitability, easing credit costs, and a stronger operating backdrop that supports its FY27 guidance.

What changed in Q1

Jana delivered a net profit of Rs 1.55bn in Q1FY27, up 11% sequentially and 52% year on year, with return on assets at 1.4% and return on equity at 13.6%, an eight-quarter high. Loan growth remained healthy at 4% quarter on quarter and 26% year on year, while margin expanded 30 basis points sequentially to 7.5%, lifting net interest income by 6% quarter on quarter and 31% year on year.

The asset-quality trend also improved. Gross NPA fell to 2.24% and net NPA eased to 0.85%, while credit cost dropped below 2% of average AUM, down from 2.25% in the prior quarter.

Why the brokerage is positive

ICICI Securities sees the quarter as evidence that Jana is regaining operating momentum after a difficult FY26. It expects PAT to grow by more than 90% in FY27 on a low base, with return on assets at 1.2% and return on equity at 13%.

The brokerage’s revised target price is based on 1.2x September 2027 estimated price-to-book, compared with 1.1x earlier, reflecting greater confidence in earnings recovery and return ratios.

Growth engine remains intact

Management has kept its FY27 gross loan growth guidance at 19% to 21%, while deposit growth is expected at 23% to 25%. The secured book grew 4% quarter on quarter and 29% year on year, and unsecured advances rose 3% quarter on quarter and 18% year on year, pushing the secured mix to 72.8%.

The bank’s growth priorities remain spread across affordable housing, MSME lending, vehicle finance, gold loans and the MFI book. Management also flagged upcoming product launches such as a credit line on UPI in Q2FY27 and loan-against-shares in FY27, both of which could add incremental traction.

Promoter overhang is being watched

The report notes that Jana’s promoter entities, Jana Holdings and JCL, faced a technical default on their NCD payments after extending debt maturity by six months to allow time to sell their stakes. That has placed the bank on rating watch, but ICICI Securities says the bank’s business operations remain unaffected.

Promoter ownership has fallen to 16.9% from a peak of 44%, and the bank has not borrowed fresh capital from promoters since Jun’22. The brokerage highlights that Jana has no common board members or cross-default linkage with the promoter entities, which helps limit operational contagion.

Capital and balance-sheet strength

Jana has approved tier-1 capital of Rs 7.28bn through share warrants under the preferential route, and has already received Rs 1.03bn from TVS Venu Group in Jun’26. Another Rs 0.8bn will come after RBI approval for the 9.99% stake, while the remaining 75% is expected over the next six quarters.

The bank’s capital adequacy remains comfortable, with CRAR well above regulatory requirements at 20.2%. That gives Jana room to fund growth while preserving operating flexibility, especially as it plans 80 new branch additions, 30 branch splits and 40 relocations during FY27.

Levels and investor targets

For investors, the report points to a clear upside structure: CMP Rs 498, target price Rs 600, and expected upside of about 20%. On the broker’s estimates, EPS is projected at Rs 60.5 in FY27 and Rs 59.6 in FY28, while book value per share is seen rising to Rs 486 and Rs 546, respectively.

Risks to track

The main risk is a reacceleration in credit costs if stress in the unsecured portfolio returns. A second concern is lower-than-expected recoveries from the guarantee programme, which could delay the clean-up of legacy slippages.

Even so, the base case remains constructive because Jana’s Q1 numbers show improving profitability, stable growth momentum and better asset quality, all of which support the BUY stance.