Reduce Ujjivan Small Finance Bank; target of Rs 29: Geojit

Geojit's research report on Ujjivan Small Finance Bank

In Q1FY21, Interest income witnessed a growth of 23% annualized driven by 22% YoY increase in advances. With close to 77% of the lending to microfinance segment , provisions saw a spike of 45% sequentially with respect to lockdown . Collection efficiency improved and as on 30th July stands at 59% indicating bank is planning to get to pre Covid levels.

Outlook

For the quarter moratorium still stands at 47% magnifying the risk and going ahead expect better operational performance ,but bottom line to hurt by higher provisioning in FY21E&FY22E We recommend Reduce rating on the stock with a target price of Rs29 based on 1.3x FY22E Adj. BVPS