Shares of Ujjivan Small Finance Bank closed with a gain of 51 percent on the listing day, December 12, on the back of buying interest from investors and strong subscription seen during IPO.
The stock closed at Rs 55.90 on the BSE, a gain of 51.09 percent, or Rs 18.90 over issue price of Rs 37. It touched an intraday high of Rs 62.80 and low of Rs 53.10 after listing at Rs 58.
On the National Stock Exchange, it rallied 51.22 percent to end at Rs 55.95 after hitting a day's high of Rs 62.80 and low of Rs 53.05. The opening price was Rs 58.75.
Ujjivan SFB traded with volumes of 25.14 crore shares on the NSE and 1.61 crore shares on the BSE.
"The experience of Ujjivan Financial Services as an erstwhile microfinance institution, coupled with the ability to address mass market customers will further aid Ujjivan Small Finance Bank to be among the leading players in small finance banking space. With strong asset quality and attractive valuation, we have a positive view on a long-term perspective," Vinod Nair, Head of Research at Geojit Financial Services said.
The subsidiary of Ujjivan Financial Services had raised Rs 750 crore through the public issue which was opened for subscription during December 2-4.
The company would use its fresh issue proceeds towards increasing its Tier – 1 capital base to meet the future capital requirements.
The IPO of Ujjivan Small Finance Bank was mainly to comply with the listing norm of the Reserve Bank of India (RBI) that calls for listing a small finance bank within three years of the launch of operations. Accordingly, Ujjivan Financial Services has to reduce its stake in small finance bank to 26 percent within a period of 12 years (January 2029).
After public issue, the promoter’s stake reduced to about 84 percent from 94.4 percent.
Even after bumper listing, most experts advised holding the stock with a target of Rs 80-120 for next one year.
"Going forward overall outlook remains optimistic on Ujjivan SFB's scope of business growth with well managed asset quality and higher provisioning resulting to higher return ratios comforting investors," Prashanth Tapse, AVP Research at Mehta Equities told Moneycontrol.
"Considering listing premium and investing rationales after listing we recommend investors to 'accumulate' if in case stock is available during intraday volatility somewhere in the range of Rs 50-55 on listing day and then one can expect healthy return on investment on medium term basis with a target of Rs 80 for 12 months holding period," he said.
Rudra Shares and Stock Brokers believes that USFB is a portfolio stock having strong corporate governance, expansion plans and balanced growth in advances & deposits.
"As per our estimates, the book value for FY21 turns to Rs 19.94, & at price-to-book value of 5-6x (considering bull run), it translates to a one year price target of Rs 100-120," the brokerage said.
Narendra Solanki, Head Fundamental Research (Investment Services) - AVP Equity Research, Anand Rathi Shares & Stock Brokers said he believes Ujjivan SFB should continue with its growth trajectory in the near to mid-term.