Here's why this smallcap banking stock extended loss for 2nd day and hit 52-week low

Over the past 3 months, the smallcap stock declined over 29 percent

Shares of Utkarsh Small Finance Bank continued their decline for the second consecutive day, falling over 4 percent to a 52-week low of Rs 31.04 per share on January 7, following a weak sequential loan growth in the December quarter update. This drop marks a 9 percent decline in just two days for the smallcap stock.

In its Q3FY25 business update, Utkarsh SFB reported a 0.2 percent quarter-on-quarter (QoQ) decrease in its gross loan portfolio, which stood at Rs 19,057 crore. However, on a year-on-year (YoY) basis, the loan portfolio grew by 16.2 percent, up from Rs 16,407 crore.

Meanwhile, the bank's total deposits rose 10 percent QoQ and 42 percent YoY to reach Rs 20,172 crore as of the December-ended quarter, compared to Rs 15,111 crore in the same period last year. This is up from Rs 19,496 crore in the previous quarter.

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In terms of deposit breakdown, CASA deposits increased by 4 percent QoQ and 31 percent YoY to Rs 3,973 crore in Q3FY25. Retail term deposits rose 7 percent QoQ and 41 percent YoY to Rs 10,163 crore, while bulk term deposits saw a 2 percent QoQ and 24 percent YoY decline, standing at Rs 6,036 crore.

The bank's micro-banking loan portfolio achieved a collection efficiency of 88 percent in Q3FY25, with a liquidity coverage ratio of 184 percent.

Utkarsh Small Finance Bank, which primarily focuses on providing banking services to underserved and unserved populations, particularly in rural and semi-urban areas, recently announced plans to sell a portfolio of non-performing assets (NPAs) and written-off loans to an asset reconstruction company (ARC).

The portfolio, consisting of unsecured stressed microfinance institution (MFI) loans with an outstanding principal of approximately Rs 355 crore as of September 30, 2024, will be sold at a reserve price of Rs 52 crore, inclusive of cash and security receipts.

Over the past 3 months, the smallcap stock declined over 29 percent, as compared to benchmark Nifty 50's 4 percent slump.

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