Buy Ujjivan Financial Services; target of Rs 457: Reliance Securities

Reliance Securities' research report on Ujjivan Financial Services

Ujjivan Financial Services – the parent company of Ujjivan Small Finance Bank (Ujjivan SFB) – is one of the leading players in India’s micro financing segment. It started banking operations in Feb’17 after securing Small Finance Bank (SFB) licence from the Reserve Bank of India (RBI). Conversion into an SFB gives the Company access to low-cost funds, wider scope for asset diversification and cross selling opportunities. Further, the Bank has alredy made most of provisioning relating to NPA during demonetisation period and the cost relating to conversion into SFB from NBFC in 1HFY18.

Outlook

On the back of healthy presence in niche segment having huge growth potential, higher margin profile, superior execution skills and strong corporate governance track record, we initiate our coverage on Ujjivan Financial Services with BUY recommendation and a Target Price of Rs457.