Mar 20, 2017 04:06 PM IST | Source: Moneycontrol.com

Buy Ujjivan Financial Services; target of Rs 550: Axis Direct

Axis Direct is bullish on Ujjivan Financial Services has recommended buy rating on the stock with a target price of Rs 550 in its research report dated March 16, 2017.

Buy Ujjivan Financial Services; target of Rs 550: Axis Direct

Axis Direct's research report on Ujjivan Financial Services

We expect customer acquisition growth to come off from 17% CAGR witnessed by the industry over FY12-16 to 5-10% over FY17-20E. Consequently, loan growth would also come off from 37% CAGR seen over FY12-16 to 15-20% during FY17-20E.

Outlook

Most of this growth will instead be driven by a rise in ticket sizes, as only vintage good-quality customers move up in the loan-cycle. As some early-cycle borrowers prosper due to timely availability of credit, their savings and credit-worthiness increase. This commences a virtuous cycle of higher loans in the next loan-cycle, expanding the size of the industry.

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