Moneycontrol
Last Updated : Jun 06, 2016 12:29 PM IST | Source: Moneycontrol.com

Ujjivan slides 9%; are anchor investors cashing out after rally?

Ujjivan had raised Rs 264.74 crore from anchor investors during its initial public offering. The investors included Birla Sunlife Trustee Company, ICICI Prudential, UTI Mutual Fund, Reliance Capital , Sundaram Mutual Fund, Tata Mutual Fund, HDFC Standard Life Insurance, Bajaj Allianz Life Insurance, Reliance Life Insurance, among others

 
 
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Moneycontrol Bureau

Shares of microfinance firm Ujjivan Financial Services are down 9 percent to Rs 347 on Monday, with brokers speculating that anchor investors could be cashing out now that their month long lock-in period has ended.

At last week’s record high of Rs 400, the stock had gained around 90 percent over its issue price of Rs 210 in less than a month since listing.

Ujjivan had raised Rs 264.74 crore from anchor investors during its initial public offering. The investors included Birla Sunlife Trustee Company, ICICI Prudential, UTI Mutual Fund, Reliance Capital Trustee Company, Sundaram Mutual Fund, Tata Mutual Fund, HDFC Standard Life Insurance Company, Bajaj Allianz Life Insurance Company, Reliance Life Insurance Company, Max Life Insurance Company, Tata AIA Life Insurance Company, BNP Paribas, LIC Nomura Mutual Fund, Canara Robeco Mutual Fund, Forefront Alternative Investment Trust and Canara HSBC Oriental Bank of Commerce Life Insurance Company.

Players tracking the stock said some profit booking was to be expected after the steep rise in the stock price over the last three weeks, and also because valuations were now beginning to look expensive.

According to market expert SP Tulisan, 2.0-2.5 times book value, which translates into Rs 350-360 per share is a reasonable price for the Ujjivan stock.

“Those who have gone and brought when the listing happened at around Rs 225, I will advise that profit booking should be made now and the stock is going into the risky zone,” Tulsian told CNBC-TV18 a couple of days back when the stock had made a new high of Rs 400.

According to Digant Haria of Antique Stock Broking, the pace of Ujjivan’s earnings growth should moderate as the company transitions to a small bank.

“The FY16 performance was based on it as a pure play microfinance company,” Haria told CNBC-TV18 recently.

“Going next year, it will be more of a small bank because they convert into a small bank at the end of this FY17. So numbers may not be so strong because they have decided to invest around Rs 300 crore in their technology infrastructure to convert themselves into a bank,” he said, adding that earnings could grow 45-50 percent this year, but would moderate from next year.

Deepak Shenoy of Capitalmind.in is bullish on Ujjivan from a long term perspective, but he will not go long on the stock in a big way at present.
First Published on Jun 6, 2016 12:26 pm
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