ICICI Direct 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 November 29, 2019
ICICI Direct's IPO report on Ujjivan Small Finance Bank
Ujjivan Small Finance Bank (USFB) is a mass market focused small finance bank (SFB) in India, catering to the unserved & underserved segment. USFB promoter, Ujjivan Financial Services Ltd, commenced operations in 2005 and later converted into a small finance bank in February 2017, post obtaining a license from RBI. Ujjivan SFB offers all banking products on assets as well as liabilities with focus on lending to micro banking segment.As of September 30, 2019, SFBs’ operations are spread across 24 state and union territories with 552 banking outlets and 441 ATMs. Ujjivan SFB has a diversified portfolio with advances at Rs 12864 crore, deposit of Rs 10130 crore. The bank is serving a huge client base of 49.4 lakh. Asset quality remained steady with GNPA ratio at 0.85% & NNPA ratio at 0.33%. In terms of performance, PAT was at Rs 199 crore in FY19 and Rs 187 crore in H1FY20.
Valuation and Outlook
USFB had a steady ride in terms of advances growth along with maintaining asset quality. There was continued focus on garnering retail liability along with building CASA base. We have a SUBSCRIBE recommendation on the stock. Further, at the IPO price band of Rs 36-37, the stock is available at a P/BV of ~2.2x (post issue) at the upper band on H1FY20 basis.
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