Utkarsh, since its inception, has largely focused on lending towards microfinance customers. However, post SFB conversion in FY17, it has strategically focused and realigned its portfolio towards secured products namely micro, small and medium enterprise, micro-loan against property, housing and commercial vehicle/construction equipment loans to leverage distribution.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
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.
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.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
