Both Bandhan Bank and Ujjivan Small Finance Bank are stories built on small loans to low income borrowers. These institutions have a deep understanding and expertise about how micro credit works on the ground. Still, the COVID impact is a major negative factor in rural economy
Indian markets rallied for the fifth day in a row on July 7 and swift price action was seen in stocks like Bajaj Finance, Bosch, Bandhan Bank, IGL and Ujjivan Financial Services.
"The contracts for new expiry months in these three securities will not be issued on expiry of existing contract months," the exchange said in its circular.
It was trading with volumes of 774,788 shares, compared to its five day average of 227,156 shares, an increase of 241.08 percent.
UBS also downgraded Ujjivan to neutral and cut its price target to Rs 200 from Rs 450 per share.
The consolidated results also include the financials of Ujjivan Small Finance Bank (USFB), which is a subsidiary of Ujjivan Financial Services.
Ujjivan SFB traded with volumes of 25.14 crore shares on the NSE and 1.61 crore shares on the BSE.
Most experts are now advising investors to hold the stock for longer term on the back of good fundamentals
The premium was warranted considering the tremendous response to the Rs 750-crore public issue and improvement in earnings and asset quality in April-Sept quarter.
If the listing takes place as per analysts expectations, then the market cap of Ujjivan Bank would be much higher than its parent company Ujjivan Financial Services' market cap of Rs 4,300 crore.
The bank would use fresh issue proceeds of Rs 750 crore to augment its Tier – 1 capital base
Ujjivan Small Finance had attracted huge subscriptions from all categories of investors because of its attractive valuation and strong asset quality.
The strategy would enable the traders to take advantage of expected up-move with limited risk.
Nirmal Bank said Ujjivan Small Finance Bank was being offered at trailing P/ABV of 2.1x on post diluted basis leaving good scope for appreciation and thus it recommended subscribing to the issue.
Ujjivan is a mass market focused SFB in India, catering to unserved and underserved segments and committed to building financial inclusion in the country.
Trends on SGX Nifty indicate a negative opening for the broader index in India, with a 14.5 points loss. Nifty futures were trading around 12,086-levels on the Singaporean Exchange
Among others, the Monetary Authority of Singapore, CX Partners Fund, Aberdeen, Bajaj Allianz Life Insurance Company, Sundaram Mutual Fund, ICICI Prudential etc also participated in the anchor investor bidding.
Ujjivan Financial Services already gained 18 percent in last 15 days and 50 percent in one year.
The bank in its RHP said proceeds of the fresh issue would be utilised towards augmenting its Tier – 1 capital base to meet future requirements, and issue expenses.
As per the draft papers, the bank is proposing to undertake an initial public offering of equity shares of face value of Rs 10 each, comprising a fresh issue of shares aggregating up to Rs 12,000 crore.
The company had registered a profit of Rs 44.3 crore in July-September 2018-19.
Trends on SGX Nifty indicate a positive opening for the broader index in India, with a 37 points gain or 0.34 percent. Nifty futures were trading around 11,074-level on the Singaporean Exchange.
Edelweiss has a positive business outlook on Ujjivan Small Finance Bank (USFB), but said the listing of USFB will mean dilution & holding company discount for existing shareholder.
The bank has appointed Kotak Mahindra Capital Company, IIFL Securities and JM Financial as book running lead managers to the issue.
The short-term trend for the Nifty50 remains bearish till the resistance of 11,800 is crossed decisively where we have seen aggressive call writing