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ICICI Securities Report
Ujjivan Small Finance Bank Ltd. delivered a strong performance in the June quarter, prompting ICICI Securities to raise its target price on the stock to Rs 90 from Rs 75 while maintaining its 'Buy' rating.
The revised target implies nearly 30% upside from current levels.
According to the brokerage, Ujjivan SFB's Q1 FY27 earnings outperformed management's own expectations, supported by resilient asset quality, stable net interest margins (NIMs), sustained loan growth and lower-than-expected credit costs.
Ujjivan SFB Q1 FY27 Result Highlights
Stable asset quality trends despite ongoing global market uncertainties, steady NIMs, and sustained momentum in disbursements have helped Ujjivan SFB (Ujjivan) deliver strong Q1 FY27 earnings with 7bps QoQ RoA expansion to 2.2% with RoE settling at >18%.
The underlying health of portfolio remains resilient, reflecting multi-quarter low slippages at 1.6% even during seasonally weak quarter.
Furthermore, X-bucket CE remained strong at 99.7%, proving unaffected by macro headwinds and broadly stable fresh PAR accretion during Q1 FY27.
NIM remained stable QoQ at 8.5% as the bank continued to benefit from deposit repricing at lower rates, while asset yield contracted by 10bps QoQ to 17.5% in Q1FY27.
Key risks:
- Lower-than-expected margins; and
- slower-than-expected AUM growth, particularly due to slow growth in unsecured portfolio.
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