Utkarsh Small Finance Bank Can Rally 63% Says ICICI Securities As It Resumes Coverage With 'Buy' Rating

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ICICI Securities Report

Utkarsh Small Finance Bank Ltd. is embarking on a journey to deliver 25% credit growth with 50% share of secured products and RoE of ~15% over the next two–three years driven by net interest margin expansion to 8.5% and credit cost at ~2%.

While we note that a structural shift in its loan portfolio (towards secured loans) would have implication on NIM, we believe a greater share of the secured portfolio would bring stability and sustainability to P&L in the long run.

We note that an elevated stress pool (MFI GNPL at 23%) would keep credit cost higher in near term. X-bucket CE at >99% in Nov’25 indicates subsiding stress in MFI segment.

With likely improvement in return ratios from Q4 FY26E, we resume coverage with Buy and a target price of Rs 26, valuing the stock at 1.25x on Sep’27E book value per share.

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