Jammu & Kashmir Bank reports 18.6% Net Income decline in 2016 and 4.0% Revenue decline

24-05-2016 • About Jammu & Kashmir Bank ($J&KBANK) • By InTwits

Jammu & Kashmir Bank reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

Jammu & Kashmir Bank has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's a lot of higher than industry average of 1.6%.
CAPEX is quite volatile: ₹1,358m in FY2016, ₹2,493m in FY2015, ₹1,566m in FY2014, ₹862m in FY2013, ₹705m in FY2012
The company has potentially unprofitable business model: ROIC is 4.0%
It operates with medium-size leverage: Net Debt/EBITDA is 0.0x while industry average is

Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

Jammu & Kashmir Bank's Revenue decreased on 4.0%. Revenue decline was accelerating on average at -8.3 pp per annum in the last 5 years.

Net Income margin decreased slightly on 1.0 pp from 6.6% to 5.6% in FY2016. During the last 5 years Net Income margin topped in FY2014 at 16.5% and was declining since that time.

Investments (CAPEX, working capital and M&A)

Jammu & Kashmir Bank's CAPEX/Revenue was 1.8% in FY2016. The company's CAPEX/Revenue increased slightly on 0.55 pp from 1.3% in FY2013 to 1.8% in FY2016. For the last three years the average CAPEX/Revenue was 2.4%.

Return on investment

The company operates at low ROIC (4.0%) and ROE (6.6%). ROE decreased slightly on 2.0 pp from 8.6% to 6.6% in FY2016. During FY2012-FY2016 ROE topped in FY2013 at 23.6% and was declining since that time.

Leverage (Debt)

Debt decreased on 4.3% while cash surged on 31.8%.

Jammu & Kashmir Bank has no short term refinancing risk: cash is higher than short term debt (213.4%).

Financial and operational results

Jammu & Kashmir Bank ($J&KBANK) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	51,706	66,221	71,602	76,602	73,523	-4.0%
Net Income	8,030	10,549	11,811	5,085	4,138	-18.6%
Balance Sheet
Cash	27,837	26,951	30,456	23,731	31,267	31.8%
Short Term Debt	4,511	4,347	74,886	10,230	14,650	43.2%
Long Term Debt	60,339	64,076	11,100	13,167	7,750	-41.1%
Cash flow
Capex	705	862	1,566	2,493	1,358	-45.5%
Ratios
Revenue growth	26.8%	28.1%	8.1%	7.0%	-4.0%

Net Income Margin	15.5%	15.9%	16.5%	6.6%	5.6%	-1.0%
CAPEX, % of revenue	1.4%	1.3%	2.2%	3.3%	1.8%	-1.4%

ROIC					4.0%
ROE	21.2%	23.6%	22.3%	8.6%	6.6%	-2.0%

Peers in Banks

Below you can find Jammu & Kashmir Bank benchmarking vs. other companies in Banks industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Kotak Mahindra Bank ($KOTAKBANK)	-	22.9%	7.1%	26.1%	29.2%
Dcb Bank ($DCBBANK)	-	26.2%	22.5%	25.3%	20.8%
Yes Bank ($YESBANK)	-	33.7%	21.6%	17.7%	18.9%
Axis Bank ($AXISBANK)	-	24.5%	13.1%	15.6%	14.9%
Lakshmi Vilas Bank ($LAKSHVILAS)	-	16.7%	11.7%	14.2%	14.6%
Median (25 companies)	45.9%	15.7%	11.2%	10.8%	4.7%
Jammu & Kashmir Bank ($J&KBANK)	-	28.1%	8.1%	7.0%	-4.0%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Union Bank Of India ($UNIONBANK)	1.2%	1.3%	1.2%	1.0%	4.4%
Indian Bank ($INDIANB)	1.2%	1.3%	1.0%	1.4%	4.3%
Axis Bank ($AXISBANK)	1.4%	1.4%	1.6%	1.2%	2.9%
Lakshmi Vilas Bank ($LAKSHVILAS)	2.1%	1.4%	1.6%	2.4%	2.4%
Idbi Bank ($IDBIBANK)	0.6%	0.4%	0.7%	0.8%	2.3%
Median (25 companies)	1.2%	1.2%	1.2%	1.3%	1.2%
Jammu & Kashmir Bank ($J&KBANK)	1.4%	1.3%	2.2%	3.3%	1.8%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Karnataka Bank ($KTKBANK)	6.8%	10.2%	7.7%	10.4%	10.1%
Yes Bank ($YESBANK)	9.8%	8.4%	8.4%	8.7%	9.0%
Axis Bank ($AXISBANK)	9.6%	8.9%	9.1%	8.8%	7.6%
Kotak Mahindra Bank ($KOTAKBANK)	6.8%	6.5%	7.1%	8.5%	7.3%
Lakshmi Vilas Bank ($LAKSHVILAS)	6.5%	7.5%	0.7%	6.1%	5.8%
Median (25 companies)	7.6%	6.3%	3.3%	4.3%	3.8%
Jammu & Kashmir Bank ($J&KBANK)	-	-	-	-	4.0%

Jammu & Kashmir Bank stock price chart

Jammu & Kashmir Bank financials

mln.	FY2010	FY2011	FY2012

Revenue	91,796	40,779	51,706
EBITDA	0.000	0.000	0.000
Net income	5,126	6,153	8,030
CAPEX	416.5	2,276	704.6
Debt	52,010	48,541	64,850
Cash	27,447	29,750	27,837

About Jammu & Kashmir Bank

The Jammu & Kashmir Bank Limited provides various banking products and services in India. The company operates through Treasury, Corporate/Wholesale Banking, Retail Banking, and Other Banking segments. It offers a range of deposit products and services, including saving bank deposits, salary accounts, term deposits, and current accounts, as well as gift check schemes. The company also provides home, personal, education, automobile, agriculture, craft, and specialized finance; and mortgage loans for immovable property, and trade and service sectors, as well as offers credit facility to fair price shops and travel and tourist taxi operators. In addition, it offers tax products and planning services; life and non-life insurance products; and nonresident banking services, as well as distributes mutual funds. Further, the company provides support services, such as core banking, Internet banking, mobile banking, ATM, and merchant acquiring services, as well as offers debit and credit cards. Additionally, it offers cash management services, including real time gross settlement and national electronic fund transfer payment services; and remittance services. As of March 31, 2014, the company operated a network of 777 branches in approximately 20 states and 1 union territory. The Jammu & Kashmir Bank Limited was incorporated in 1938 and is headquartered in Srinagar, India.