Maybe today was not a good day for the Jammu & Kashmir bank to keep analysts call. There are three major things we are taking from the new information that was made public today about its businesses.

Firstly, the management came out and said that they don’t see any profits to be made in the remaining two quarters for the 2017 financial year. Which means that Jammu & Kashmir Bank will report losses in the 2017 financial year. This also means that they will lose our investment quality grading and will be out of our wish list.

Secondly, it will take another 4 -6 quarters to re-balance their balance sheet. This means they will need a big amount of cash in-flows to keep them running. Where this money will come, we don’t know yet.

The new figure to restructure their Balance Sheet is approximately around Rs 10,000 crore, this is far bigger then what in total shareholders of this company had invested so far.

If you browse on our blog, you will see that we had warned investors about the threats that Jammu & Kashmir bank possess. Even though our quantitative analysis had always listed this bank as one of the best bank to invest with, but those analysis are based on consensus earnings guidance. We always knew that they won’t be able to post profits what the analysts are expecting from them. We valued this business for Rs 47 per share on our 2018 earnings expectations. Now as this new information is out, we don’t know think that in our next month’s top 10 investment ideas you will see this bank.

Aziz Dodhiya is the chief investment officer for the Valueoperations funds which operates in the Indian market as an FPI (Foreign Portfolio Investor). We do not offer any personal advice to buy or sell any stocks and the views that are shared by Aziz might not incline to your personal investment strategy and this is the reason we advise you to take professional advice before going ahead with our views.