Subscribe to Ujjivan Small Finance Bank: Hem Securities

December 03
03:33 2019

Hem Securities IPO report on Ujjivan Small Finance Bank

Ujjivan Small finance Bank (USFB) is a mass market focused SFB in India, catering to unserved and underserved segments in the country. Its Promoter, Ujjivan Financial Services Ltd (UFSL) commenced operations as an NBFC in 2005 with the mission to provide a full range of financial services to the ‘economically active poor’. On October 7, 2015, UFSL received RBI In-Principle Approval to establish an SFB, following which it incorporated Ujjivan Small Finance Bank Limited as a wholly-owned subsidiary. UFSL, subsequent to obtaining RBI Final Approval on November 11, 2016 to establish and carry on business as an SFB, transferred its business undertaking comprising of its lending and financing business to USFB, which commenced its operations from February 1, 2017.

Valuation and Outlook

USFB is bringing the issue at p/b multiple of approx. 2.25 at higher end of price band of Rs 36-37/share. Currently USFB have a strong customer base of 4.94 million customers & bank intend to strengthen its liability franchise with a focus on growing its retail deposit base which provide it with a stable, low-cost source of funding. USFB with its deep understanding of mass market serving unserved and underserved segments is customer centric organization with multiple delivery channels .Also bank’s pan India presence along with strong asset quality as GNPA being the lowest & has second highest provision coverage ratio among the small finance banks in India, as of March 31, 2019 depicts strength in fundamentals of bank. Hence we recommend “Subscribe” on issue for listing gain as well as long term investment .

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