Hold Ujjivan Financial; target of Rs 430: Centrum

Centrum's research report on Ujjivan Financial

Since our last note (Q3’18) the stock is up 34% on expectations of improved loan growth, receding asset quality and slow yet steady progression towards the SFB transition. Q4’18 results saw each of these aspects play out well. Growth guidance has been revised upwards; asset quality improving and we have factored the same into our estimates.

Outlook
We expect RoA /RoE for Ujijvan to inch towards 2.3% / ~15% by end-FY20E. Valuations at 2.2x FY20E ABV however limit near term upside. Downgrade to HOLD with TP at Rs430 (valued at 2.3x FY20E). Key risks: Higher than expected compression in margins or lower growth.

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