Ujjivan Small Finance Bank Ltd. share price target

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...

High moratorium & weak asset quality to weigh... Ujjivan Small Finance Bank, the wholly owned subsidiary of Ujjivan Financial Services Ltd. (USFL) serves over 54.7 lakh customers through 524 branches and 17,370 employees spread across 244 districts of 24 states in India with gross loan book size of Rs.14,366cr. Also, it has about...

Ujjivan Small Finance Bank (USFB) reported in-line set of operating numbers, however, net profitability was lower driven by higher than expected provisions for Covid-19.

Ujjivan Small Finance Bank (USFB) reported stellar set of operating numbers this quarter.

Ujjivan Small Finance Bank (USFB) reported stellar set of numbers this quarter driven largely by healthy growth in loans & advances while asset quality remained stable.

A Leading player among Small Finance Banks Ujjivan Small Finance Bank Limited (USFB), incorporated in 2017, is a mass market focused Small Finance Bank (SFB). USFB Bank is promoted by Ujjivan Financial Services Limited (UFSL) which commenced operations as an NBFC in 2005. Ujjivan Small Finance Bank serves over 49 lakh customers through 552 branches spread across 232 districts in 24 states & union territories of India. Its...

Ujjivan Small Finance Bank (USFB) has started the operations in Feb 2017 and had Building blocks in place for next phase of upsurge the most diversified portfolio, spread across 24 states and union territories as of March 31, 2019 among the 10 SFB players in India. With a total loan book of Rs.128.6bn as of Sept '19, it's the third largest SFB among the 10 SFB players that got the license. Asset products as of Sep'19 comprises: (i) loans to micro banking customers that include group loans and individual loans, (ii) agriculture and allied loans, (iii) MSE loans, (iv) affordable housing loans, (v) financial institutions group loans, (vi) personal loans,...

TTM Price to Book of 2.8 (IPO Price), it is valued below its peers. With the regulatory hiccups out of the way, the management can focus on growth of the core business. We expect the company to grow NII & Profitability at a CAGR of 25% over the next 3 years, with well managed NPAs. We expect ROA & ROE to reach 2% & 15% respectively over the next 3 years.

Given all the growth prospects, we are bullish on Ujjivan SFB & We recommend a subscribe for the IPO.

Having a strong management team, It has the most diversified portfolio spread across 24 states & union territories. Thus, this diversified operations allow to de-risk business by mitigating political and state-specific risks. Further, as a result of geographic spread, it helps to reduce concentration risk and diversify loan portfolio.

Being the leading SFB’s amongst peers in India, Ujjivan has maintained strong Asset quality with lowest GNPA (Gross Non- performing Assets) levels at 0.85% and higher provisioning at 72% during sep.2019. Apart from having a strong presence in the country’s microfinance sector; the bank has started focusing on the retail loan segment.

As per our estimates, on the upper price band of ` 37, post issue estimated P/BV for FY20 translates to 2.18x. which is quite lower compared with the 4x-5x P/BV ratio that the industry commands. Considering asset quality, growth in advances & deposits, expansions plans, corporate governance, we recommend to subscribe for long term as well as listing gains.