Why Did Shares of Jana Small Finance Bank Skyrocket 15% Despite 92% YoY Fall in Profit?

Synopsis: Shares of Jana Small Finance Bank Ltd surged 15% despite a 91% YoY drop in Q3 profit, as investors focused on improving asset quality, lower slippages, 30% deposit growth, NIM expansion, and rising guarantee coverage of unsecured loans, signalling that earnings may have bottomed out.

The shares of this company which is a small finance bank and provides a wide range of banking and financial services, had its shares in the news today after the bank reported its Q3 results with a huge fall in the profits, despite which the shares jumped

With the market cap of Rs 4,091 crore, the shares of Jana Small Finance Bank Ltd have gained about 15% and reached a high at Rs  403.20, compared to their previous day’s closing price of Rs 350.60. The shares are trading at a PE of 13.1, whereas its industry PE is at 22.8.

About the Q3 Result highlights

The net interest income for the company stood at Rs 675 crore when compared to Rs 593 crore in Q3 FY25, growing by about 14 per cent on a YoY basis and on a QoQ basis increasing by 9 per cent from Rs 618 crore in Q2 FY26.

The PAT fell by about 91 per cent on a YoY basis when you compare the Q3 FY26 profit at Rs 10 crore to Rs 111 crore in Q3 FY25 and, on a QoQ basis, has fallen by 87 per cent from Rs 75 crore in Q2 FY26. 

Why did the shares jump? 

Despite reporting a decreased profit, shares of Jana Small Finance Bank saw an increase as investors shifted their attention towards clear signals that operations are returning to normal. The bank cited decreased levels of slippages and special mention accounts, peak stress already experienced at the end of Q1 FY26, record-high disbursal activity since the end of Q1 FY25, and an increase of 10 basis points in NIM; these elements indicate a continued upward trend in core profitability.

Furthermore, YoY increases in deposits were at 30%, while funding costs were decreasing, in addition to the fact that 62% of the unsecured loan portfolio has guarantee coverage. 

Improved visibility around asset quality supports the assertion that earnings are at their lowest levels and that a recovery cycle has begun. Also adding to the recovery story, Jana Small Finance Bank anticipates that approximately 85% of its unsecured loan portfolio will qualify for coverage under the guarantee scheme in March 2027, significantly desensitising this asset class. 

The bank believes that while NIM will likely remain fairly stable, the bank will incur a guarantee premium cost (approximately Rs 70 Crore) for FY26-27, thus increasing operating expenses; this will be offset by the anticipated revenue of approximately Rs 120 Crore related to claims and an estimated total of Rs 300 Crore for FY27-28. As cash from recoveries begins to be received, RoA is projected to increase by 50-70 basis points, firmly supporting the belief of a return to long-term normalised earnings and improved returns in the near future.

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