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Subscribe to Ujjivan Small Finance Bank: Anand Rathi

December 02
15:33 2019

Anand Rathi’s IPO report on Ujjivan Small Finance Bank

Ujjivan Small Finance Bank Limited (Ujjivan SFB) is one of the leading players in the small finance bank (SFB) space in India, catering the mass market focused on “financially unserved and underserved segments” and committed to building financial inclusion in the country. Ujjivan Financial Services Limited (UFSL) – the promoter of Ujjivan SFB – commenced operations as an NBFC in 2005 with focus to provide a full range of financial services to the economically weaker group of people who mostly lacked services from financial institutions. UFSL’s earlier business was primarily based on the joint liability group-lending model for providing collateral free, small ticket-size loans to economically active poor women and also offered individual loans to Micro and Small Enterprises (MSEs). It adopted lending approach similar to microfinance, with the technology infrastructure and related back-end support functions similar to that of a retail bank.

Valuation and Outlook

At upper price band of ?37, the IPO is priced at 2.1 times post issue FY20 BV and 17.1 times post issue FY20 EPS (annualized). We remain optimistic considering several positive factors such as continued growth in advances, improving asset quality, sound capital position and diversified geographic foot print. As such, we recommend Subscribe to this IPO.

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