Ujjivan Small Finance Bank - Strong Business Momentum To Continue: Geojit

Enhanced profitability aided by healthy credit growth and lower cost.

<div class="paragraphs"><p>Ujjivan Small Finance Bank exterior, signage. (Photo: Usha Kunji/BQ Prime) </p></div>
Ujjivan Small Finance Bank exterior, signage. (Photo: Usha Kunji/BQ Prime)

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Geojit Research Report

Ujjivan Small Finance Bank Ltd., a wholly owned subsidiary of Ujjivan Financial Services Ltd., serves over 76 lakh customers through 661 branches. Ujjivan Financial Services is the third largest SFB with a loan book size of Rs 25,326 crore and a deposit base of Rs 26,660 crore.

Investment thesis

  • Advance growth is expected to remain strong at 25%, led by both microfinance and non-micro finance book with strong customer addition and brand building strategies.

  • Considering strong loan growth, an improving cost to income ratio and lower credit costs, Ujjivan Financial Services is expected to record an return on equity of 25% in FY24 and 23% in FY25, well above the management guidance.

  • The proposed reverse merger with the parent company is expected to be completed within 2024.

  • Asset quality continues to witness improvement, with gross/net non-performing asset declining to 2.40%%/0.06%, respectively.

  • Considering the strong business performance, we upgrade our rating to 'Buy' based on 1.8 times FY25E adjusted book value per share with a target price of Rs 62.

Click on the attachment to read the full report:

Geojit Ujjivan Small Finance Bank Update.pdf
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