Ajcon Global has come out with its report on Ujjivan Small Finance Bank. The research firm has recommended to "Subscribe'' the IPO in its research report as on December 02, 2019
Ajcon Global's IPO report on Ujjivan Small Finance Bank
USB is a mass market focused SFB in India, catering to unserved and underserved segments and committed to building financial inclusion in the country. As of September 30, 2019, USB served 4.94 million customers and operated from 552 Banking Outlets that included 141 Banking Outlets in Unbanked Rural Centres (“URCs”) (of which seven were business correspondent centres) and additionally operated four Asset Centres. In Fiscal 2019 alone, USB operationalized 287 Banking Outlets. As of September 30, 2019, USB had a network of 441 ATMs (including 18 ACRs), two 24/7 phone banking units based in Bengaluru and Pune.
Valuation and Outlook
At upper end of the price band of Rs. 37, the issue is valued at a P/BV of 2.9x (post issue: 2.25x) is at a premium but we believe is justified owing to the following factors: a) deep understanding of mass market serving unserved and underserved segments, b) customer centric organization with multiple delivery channels, c) pan – India presence, d) technology driven operating model with advanced digital platform, e) robust risk management framework, f) strong record of financial performance, g) CAR ratio of 18.8 percent which is above regulatory requirements, g) expanding CASA in overall deposits, h) controlled credit cost with declining NPAs and PCR of 65.1 percent, i) decent ROE of 10.2 percent, we recommend investors to “SUBSCRIBE” the issue.
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