Buy Ujjivan Small Finance Bank; target of Rs 55 : ICICI Securities

ICICI Securities research report on Ujjivan Small Finance Bank

Ujjivan Small Finance Bank (Ujjivan) is amongst the few SFBs which had been successful in scaling loan portfolio to INR 333bn by Q1FY26 from INR 75bn in FY18 with an average credit cost of ~150bps (ex-Covid). While the transition from an NBFC to SFB was a challenging journey, Ujjivan demonstrated strong execution, as reflected in the gradual build-up of liability franchise (~25% CASA as on Jun’25) along with managing its assets (also pivoting from unsecured portfolio). Building upon its strong foundation it laid between FY17-25, it unveiled a strategic roadmap to achieve RoA of 1.8-2.0% with RoE of 16-18% by FY30 with a focus on loan diversification, strengthening liability franchise and improving branch productivity. It plans to deliver ~25% loan growth and scale credit portfolio to INR 1trn, improve the share of secured portfolio to 65-70% (currently 46%), expand CASA ratio to 35% (24.3% as on Jun’25) and bring down C/I to 55% by FY30.

Outlook

Retain BUY with an unchanged TP of INR 55, valuing the stock at 1.5x on Sep’26E BVPS.