HDFC Securities has reduce call on Ujjivan Small Finance Bank Ltd. with a target price of Rs 20. The current market price of Ujjivan Small Finance Bank is Rs 21.
Time period given by analyst is one year when Ujjivan Small Finance Bank Ltd. price can reach defined target.
Ujjivan Small Finance Bank Ltd., incorporated in the year 2016, is a banking company (having a market cap of Rs 3638.10 Crore).
Ujjivan Small Finance Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2021.
Financials
For the quarter ended 30-09-2021, the company reported a Standalone Total Income of Rs 691.93 Crore, down -3.40 % from last quarter Total Income of Rs 716.29 Crore and down -15.41 % from last year same quarter Total Income of Rs 818.01 Crore. The bank reported net profit after tax of Rs -273.79 Crore in latest quarter.
Investment Rationale
Ujjivan SFB reported yet another quarter of loss at INR2.74bn as the stressed pool remained persistently elevated. While the aggregate stress pool (PAR>0) declined sequentially from 31% to 19%, the excessive stress suggests normalisation would be delayed beyond FY22. Restructured book increased from 5.5% to 10.2% sequentially, with loan loss coverage at 75% (including INR0.25bn of COVID provisions), driven by accelerated provisioning at ~10.4% of gross advances. Business momentum was revived with disbursals of INR31.2bn (near pre-COVID levels) and a declining share of MFI loans (70%). With limited visibility of RoA reflation and a stubborn stress pool, it downgrades Ujjivan SFB from ADD to REDUCE with a revised TP of INR20 (earlier INR34) and downgrade Ujjivan Financial Services from BUY to ADD with a revised TP of INR189 (earlier INR322).
Promoter/FII Holdings
Promoters held 83.32 per cent stake in the company as of 30-Sep-2021, while FIIs owned 0.56 per cent, DIIs 0.76 per cent.
