Buy Utkarsh Small Finance Bank; target of Rs 70: ICICI Securities

ICICI Securities is bullish on Utkarsh Small Finance Bank has recommended buy rating on the stock with a target price of Rs 70 in its research report dated August 06, 2024.

Broker Research

August 07, 2024 / 13:03 IST

Buy

ICICI Securities's research report on Utkarsh Small Finance Bank

Utkarsh SFB’s (Utkarsh) Q1FY25 core operating performance continued to be robust as reflected in 10% QoQ PPoP growth and RoE sustaining at >18% despite challenges due to heatwaves and election. While asset quality parameters deteriorated sequentially as reflected in SMA 1 & 2 increasing to 2.6% vs 1.9% QoQ, collection in MFI falling to 96% vs 98% QoQ and elevated slippage ratio at ~4% during Q1FY25, management sounded confident of achieving FY25 credit cost guidance of ~2% vs 2.7% in Q1FY25. It has implemented new guardrails announced by MFIN and does not foresee any material impact on its FY25 credit growth guidance of 30%.

Outlook

We continue to prefer Utkarsh within SFB space considering its balanced growth approach and sharp focus on asset quality, even while growing balance sheet and profitability. Maintain BUY with an unchanged TP of INR 70, valuing the stock at 2x Sep’25E BVPS.

For all recommendations report, click here