Finance

Ujjivan Small Finance Bank share price: Buy Ujjivan Small Finance Bank, target price Rs 20: ICICI Securities

has buy call on Ujjivan Small Finance Bank with a target price of Rs 20. The current market price of is Rs 17.3. Time period given by analyst is one year when . price can reach defined target.




Ujjivan Small Finance Bank Ltd., incorporated in the year 2016, is a banking company (having a market cap of Rs 3024.55 Crore).

Ujjivan Small Finance Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 920.80 Crore, up 15.29 % from last quarter Total Income of Rs 798.68 Crore and up 25.26 % from last year same quarter Total Income of Rs 735.14 Crore. The bank reported net profit after tax of Rs 126.52 Crore in latest quarter.

Investment Rationale
Ujjivan Small Finance Bank’s (Ujjivan) Q4FY22 financial performance is an outcome of its 100-day action plan implemented in Oct’21 with three key objectives: i) rebuild business volumes, ii) improve asset quality, and iii) retain & build a good long-term team. Successful implementation of the plan is evident from: 1) the strong 10% QoQ growth in AUM driven by sustained highest-ever disbursement at Rs48bn in Q4FY22, 2) substantial decline in the stressed asset portfolio leading to credit cost moderating to a multi-quarter low of 1%, and 3) robust growth of >50% QoQ in PPoP. SMA pool reducing to 2.5% (PAR 61-90 at 0.4%), standard restructured pool of ~2.6% and PCR of >90% on existing NPL pool provides comfort on improving the credit cost trajectory going forward. Further, during Q4FY22, the new management continued plugging talent gaps with a combination of lateral hiring as well as internal promotions. It hired a new CFO and head of internal audit during Q4FY22. Post the recent correction in stock price, the brokerage upgrades to BUY (from Hold) with an unchanged target price of Rs 20, valuing the stock at 1.25x FY23E BVPS.


Promoter/FII Holdings
Promoters held 83.32 per cent stake in the company as of 31-Mar-2022, while FIIs owned 0.26 per cent, DIIs 0.54 per cent.

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