Ujjivan Small Finance Bank - Strategic Update Along With Guidance Revision: Systematix

Systematix Research Report

We attended the analyst meet hosted by Ujjivan Small Finance Bank Ltd. yesterday. Management presented the strategic objectives for the medium term and highlighted some of the prevalent issues within its gamut of operations.

The key takeaway for us was the revision in FY25 outlook on the back of stress seen in its micro-banking portfolio in a few pockets in states of Punjab, Haryana, Gujarat, Kerala and UP (~5 out of 29 districts) on the back of various social and economic factors.

Ujjivan SFB revised its FY25 outlook in terms of growth at 20% (lower end of the 20-25% range earlier), credit costs ~1.7% (1.4-1.5% earlier), and return on equity of 20% (22% earlier).

The bank will be applying for a universal banking license during FY25. On consensus basis, the stock trades at FY25 price/book of 1.4 times for FY25 return on asset / return on equity of 3% / 22%.

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