Ujjivan Small Finance Bank Ltd. share price target

Second wave induced credit costs eroding profitability

We currently have a BUY recommendation on the stock with a target price of Rs 37/share (1.8x FY23E ABV), implying an upside of 17% from CMP.

While COVID 2.0 related headwinds are likely to delay the recovery process, we remain confident in the resilience of the business model. We maintain a BUY on the stock. We value UJSFB at 1.8x FY23E ABV and arrive at a target price of Rs. 37/share, implying an upside of 21% from CMP.

Ujjivan Small Finance Bank, the wholly owned subsidiary of Ujjivan Financial Services Ltd. (USFL) serves over 56.6 lakh customers through 575 branches and 16,733 employees spread across 244 districts of 24 states in India with gross loan book size of Rs.13,638cr. Also, it has about 477 full-service banking outlets with a deposit base of Rs.11,617cr. Pre-Provision profit reported a growth of 42% on a YoY basis due to lower operating expenses and strong fee and other income. Higher credit cost and upfronting of provisions hurt bottom-line as the...

We maintain a BUY on the stock with a target price of Rs. 41. (1.9x FY23E ABV).

Ujjivan SFB (UJSFB) is a diversified leading SFB which transitioned from a NBFC (Ujjivan Financial Services Ltd.) in Feb17. The bank primarily caters to the low and middle-income individuals and businesses in the metro and urban areas that have limited or no access to formal banking

The fast paced diversification from a microfinancier to a small finance bank, the recent ramp up in the liability franchise after a slow start, management's focus on technology driven product expansion and customer sourcing strategy and razor sharp focus on maintaining asset quality cement

Ujjivan Small Finance Bank, the wholly owned subsidiary of Ujjivan Financial Services Ltd. (USFL) serves over 55.3 lakh customers through 575 branches and 17,018 employees spread across 244 districts of 24 states in India with gross loan book size of Rs.13,890cr. Also, it has about 477 full-service banking outlets with a deposit base of Rs.10,743cr. We revise our rating to Hold from Reduce on the stock with a revised upward target price of Rs.38 based on 1.6x FY22E Adj.BVPS....

A large PPOP/earnings beat in Q2; improved cost metric alleviating creditcostimpactonRoARateBUYwith12mPTofRs40 UjjivanSmallFinanceBank(USFB)deliveredalargebeatonearningsinQ2FY21led byastrongerNIIperformance,highernoninterestincome,controlledopexgrowthand lowerthanestimatedprovisioning.Sequentialdeclineingrossadvancesat3.4%(yoy growth decelerated sharply to 8%) was caused by 6% contraction of Micro Banking portfolio(sharedeclinedto76%)wherethebankhasbeencautiousondisbursements and has tightened credit policy. Qoq growth in affordable housing and MSE lending...