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Last Updated : Dec 02, 2019 12:24 PM IST | Source: Moneycontrol.com

Subscribe to Ujjivan Small Finance Bank: LKP Research

LKP Research 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 01, 2019

 
 
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LKP Research's IPO report on Ujjivan Small Finance Bank


Ujjivan is a play on the MFI growth story. So far, it has effectively managed to grow assets with decent asset quality profile. However, going forward trajectory of business model will change with buildup of non-MFI loans and ramp of retail liabilities which shall be an uphill task for the new management in the wake of tough competition in the market space. Also, the bank will have to reduce down the promoter stake further to 40% over the next 2 yrs from levels of 84% post IPO as per RBI guidelines which will be a hangover in the medium term. In this backdrop, in our view, the bank is not likely to trade at higher multiples.


Valuation and Outlook


Our back of the envelope calculation suggests, the bank is trading at 1.6x FY22e. Given reasonable valuations, we recommend SUBSCRIBE to the issue.


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Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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First Published on Dec 2, 2019 12:24 pm
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