Buy Ujjivan Financial Services; target of Rs 415: Geojit Financial Services

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Geojit Financial Services' research report on Ujjivan Financial Services

Loan book grew at a nominal pace of 16% YoY in Q4FY17, marred by lower disbursements amid conservative client acquisition post demonetisation. Total clients de-grew -5% QoQ, and management remain conservative in the medium term due to risks emerged post demonetisation. We lower our loan growth estimates and factor 25% CAGR in loan book over FY17-19E.

Outlook

Ujjivan is currently trading at 2.4x one yr forward Adj B/V (from a peak of 3x). Despite prospective business model with growth visibility, earnings headwinds will influence the valuation. We therefore lower our target valuation to 2.5x FY19E Adj. BV, while retain our Buy rating with a revised target price of Rs 415.

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