Centrum's research report on Ujjivan Financial Services
Q3’17 NII grew 47% to Rs 2.29bn (broadly in-line with estimates) led by 43.5% YoY growth in overall GLP and 13.2% margins (+39bps YoY). Operating expenses were a tad higher at Rs 1.17bn (+52% YoY) as the quarter saw some front loading of SFB model related transition expenses. Provisioning was higher as management created reserves against the shortfall in CE.
Outlook
We upgrade Ujjivan to Hold with TP at Rs 390. Our interaction with laterals ascertains that a considerable degree of normalcy has been achieved; post the immediate fallout of the demonetisation seen in Nov-Dec’2016. This was further vindicated by the post-result conference call that pointed to overall collection efficiency (CE) at 90%+. Ujjivan Q3’17 results were operationally strong.
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