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.
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.
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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