Ujjivan SFB share price tanks after Nitin Chugh's resignation

Ujjivan Small Finance Bank or Ujjivan SFB share price today crashed to its record low price of ₹ ₹19.75 per stock levels — nosediving around 18.60 per cent in the intraday trade session. According to market experts, this tumble in Ujjivan SFB shares is due to the resignation of its Managing Director (MD) Nitin Chugh, former HDFC bank official who had joined here for three year period. They said that market had high expectation from Nitin Chugh and after his resignation, market sentiment has gone negative against the small finance bank and one should avoid the stock in future as its provisioning is also expected to go up due to second wave of Covid-19.

Speaking on the reason for Ujjivan Small Finance Bank share price crash; Avinash Gorakshkar, Head of Research at Profitmart Securities said, "Ujjivan SFB stocks have tumbled today following the resignation of its MD Nitin Chugh. He was former HDFRC Bank official and both the bank and the markets had high expectations from him. He had joined Ujjivan SFB for three years but he has resigned before the end of his tenure, which hasn't gone down well among the investors. In fact, due to the second wave of Covid-19, its provisioning is expected to shot up and its quarterly results are expected weak in near future. So, there is not much hope for revival of recovery in Ujjivan SFB shares as well." He strictly advised investors to avoid taking any position in the counter.

Standing in sync with Avinash Gorakshkar;s views; Sumeet Bagadia, Executive Director at Choice Broking said, "Till Ujjivan Small Finance Bank share price is ₹24 per share mark, one should avoid taking any position in the counter. Once it breaks ₹23 to ₹24 hurdle and sustains above it, then only one can think of buying this counter."

Santosh Meena, Head of Research at Swastika Investmart Ltd said, "The instability of management is always a concern for any company and we have seen high attrition level in Ujjivan SFB whereas overall small finance banking sector is going through a tough time after a golden period of 2017 and Ujjivan SFB is showing pain in asset quality as well. Investors are advised to avoid catching falling knife while existing investors should wait for more clarity about the new management and actual concerns in the company."

Highlighting the fundamentals of Ujjivan Small Finance Bank; Vinit Khandare, CEO & Founder at MyFundBazaar said, "Being a mass-market focused bank, catering to financially unserved & under-served segments, Ujjivan Small Finance Bank’s eccentric turn of events have left apprehensive concerns towards the market stability - hitting a record low down 8 percent, an unusual amount of trading shares having taken place in the last two weeks, the April-June quarter (QFY22) for Ujjivan SFB had reported a higher-than-expected loss of ₹230 crores due to elevated provisions timing with the MD & CEO of Ujjivan SFB having tendered his resignation citing to personal reasons." He went on to add that the bank’s long-term growth prospects a hinge on the ramp-up of its liability pool & asset-side product diversification away from any micro-finance institutions keeping events like COVID-19, waivers & natural calamities in mind. Moreover, these factors structurally weigh on margins.