Utkarsh SFB - Decade-Long Experience In Bihar Augurs Well For Growth Sustainability: ICICI Securities

ICICI Securities Report

Utkarsh Small Finance Bank Ltd. kick-started its lending journey in the states of Uttar Pradesh and Bihar, and since inception (in FY10), it has remained committed in establishing a strong niche in these states.

Considering the under penetration in its core markets (Bihar’s top five districts covered 46% of overall credit, of which Patna alone contributes 29% share), with Utkarsh having a strong market share of 56% within small finance banks (overall market share at 2%), the SFB is best placed to complement the Bihar growth story.

This, coupled with its enhanced product offering, proven track record of managing asset quality better than peers (write-offs during covid at 12% versus 15-20% for micro finance players) and its rapidly evolving liability franchise (steady decline in cost of funds), ensure sustainability of more than 18% return on equity and more than 25% growth over FY24-26E.

Maintain Buy with an unchanged target price of Rs 70, valuing the stock at two times FY25E book value per share.

Key risks:

• Sharper margin deterioration due to stiff competition in secured lending and

• higher-than-expected credit costs.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.