J&K Bank hits over 8 year high; soars 23% in 2 days on fund raising via QIP

The stock was quoting at its highest level since February 2015

Shares of Jammu & Kashmir (J&K) Bank hit over eight-year high of Rs 139.95 as they soared 12 per cent on the BSE in Tuesday's intraday trade on the back of heavy volumes. The spurt comes amid the lender's fund raising plan via qualified institutional placement (QIP).

As per the exchange filing, the board of J&K Bank has approved the floor price at Rs 112.66 per share for raising Rs 750 crore through QIP.

In the past two trading days, the stock of the private sector lender has rallied 23 per cent. It was quoting at its highest level since February 2015. The stock had hit a record high of Rs 195.48 on May 26, 2014.

At 01:59 PM, J&K Bank was trading 7 per cent higher at Rs 133.40 as compared to 0.28 per cent decline in the S&P BSE Sensex. The average trading volumes on the counter jumped over three-fold today with a combined 39.33 million equity shares having changed hands on the NSE and BSE.

The Capital Issuance Committee of Board of the J&K Bank, at its meeting held on Monday, December 11, 2023, approved the opening of the QIP at the floor price of Rs 112.66 per equity share for the QIP. The committee is scheduled to meet on Thursday, December 14, 2023 to consider and approve the issue price, including a discount, if any thereto.

J&K Bank said it intends to utilise the net proceeds to augment the Bank's capital adequacy base to support growth plans and to enhance the business of the bank or any other purposes.

According to analysts at Emkay Global Financial Services, post abrogation of Article 370 on February 3, 2021, J&K State (now UT) is under the governor's rule, leading to meaningful reduction in terrorism, political noise (incl. stone pelting), and steady socio-economic development including record influx of tourism.

J&K Bank also underwent management change with the appointment of the current MD, Baldev Prakash (from SBI) in December 2021. Since then, the top management has staged a gradual turnaround in the bank from its tumultuous past, including high NPAs due to RBIs AQR/floods/Pandemic, forcing the bank to abandon growth/unwind its credit portfolio.

"The bank believes political interference has come down materially, while RBI as well as the central government should continue to have enough say in the management to ensure a smooth conduct of the bank, even if statehood is restored. So, effectively, the bank may have dual control, including that of the central government, ensuring management/strategic business stability," the brokerage firm had said in a September report.

The bank's deposit franchise and position in the union territory (UT) of J&K remains strong with the improvement in the economic environment in the UT post abrogation of Article 370. Stressed accounts related to the hospitality sector in the region are seeing improved business due to the recovery of tourism, while increased levels of economic activities in the region post Covid-19 pandemic lockdown relaxation have helped in reducing the rate of incremental slippages which have supported asset quality metrics in the medium term, Brickwork Ratings had said in its rating rationale.