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Geojit Fin
Ujjivan SFB (Hold)
Target: ₹38
CMP: ₹34.95
Ujjivan Small Finance Bank, the wholly owned subsidiary of Ujjivan Financial Services Ltd. (USFL), serves over 55.3 lakh customers through 575 branches and 17,018 employees spread across 244 districts of 24 States in India with gross loan book size of ₹13,890 crore. Also, it has about 477 full-service banking outlets with a deposit base of ₹10,743 crore.
We revise our rating to ‘Hold’ from ‘Reduce’ on the stock with a revised upward target price of ₹38 based on 1.6x FY22E Adj BVPS.
Interest income witnessed a growth of 21 per cent annualised, driven by 8 per cent y-o-y increase in advances; pre-provision profit reported a growth of 64 per cent on a y-o-y basis due to lower opex and strong sequential recovery in other income; higher Current Account Savings Account ratio to reduce cost of funds; collection efficiency improved from 54 per cent in June 2020 to 88 per cent in October 2020; and asset quality remained stable with prudent provisioning as Provision coverage stands at 86 per cent
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