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Last Updated : Nov 30, 2019 01:58 PM IST | Source: Moneycontrol.com

Ujjivan Small Finance Bank IPO: Subscribe for long term as well as listing gains

As per our estimates, on the upper price band of Rs 37, the P/BV estimated after the issue for FY20 translates to 2.18x, which is quite lower compared with the 4x-5x P/BV ratio that the industry commands.

Moneycontrol Contributor @moneycontrolcom
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Amongst the leading small finance banks (SFB) in India, Ujjivan Small Finance Bank has maintained strong Asset quality with lowest GNPA (Gross Non- performing Assets) levels at 0.85 percent and higher provisioning at 72 percent amongst peers during September 2019.

Having a strong management team, it has the most diversified portfolio spread across 24 states and union territories.

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Ujjivan’s Gross advances grew healthily from Rs 6,384 crore in 2017 to Rs 12,864 crore in Septembers 2019, almost double in number. Apart from having a strong presence in the country’s microfinance sector; the bank has started focusing on the retail loan segment.

The CASA to total deposit ratio for the bank is also improving at 11.87 percent for September 2019. To attract retail customers and increase CASA deposits, new products and marketing campaigns are expected to come up.

Management stated to expand ATM and ACR network. Moreover, to increase advances and deposits, the focus is on converting existing asset centres to banking outlets and selectively operationalise additional banking outlets.

As per our estimates, on the upper price band of Rs 37, the P/BV estimated after the issue for FY20 translates to 2.18x, which is quite lower compared with the 4x-5x P/BV ratio that the industry commands.

Considering the asset quality, the growth in advances and deposits, expansions plans, corporate governance, we recommend to subscribe for long term as well as listing gains.

Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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First Published on Nov 30, 2019 01:58 pm
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