Ujjivan Small Finance Bank surges 4% post strong Q4 results, brokerages recommend ‘buy’

The shares of Ujjivan Small Finance Bank surged more than 4 per cent on Friday's trade post strong March quarter results.

The company's scrip was trading 4.21 per cent up at ₹30.48 on BSE.

Ujjivan Small Finance Bank registered strong growth in the bottom-line and top-line front for the fourth quarter of FY23. PAT comes to around ₹309.50 crore in Q4FY23, rising by 144.62 per cent from ₹126.52 crore a year ago same period.

Ujjivan SFB's disbursement was at ₹6,001 crore in Q4FY23, and ₹20,037 crore for the full year FY23, crossing major milestones. The lender saw an all-round growth with Housing and FIG crossing milestones of ₹400 crore and ₹300 crore in quarterly disbursement --- disbursing ₹439 crore and ₹318 crore respectively -- which is the highest ever for both the segments.

Net interest income (NII) which is the difference between interest earned and expended, came in at ₹738.01 crore in Q4FY23, registering a growth of a whopping 35.66% from ₹543.98 crore in Q4FY22 and also up by 5.89% from ₹696.95 crore in December 2022 quarter.

Here's what brokerages suggest:

ICICI Securities

USFB has sustained its improving trajectory in profitability, backed by its revised business strategy post the management change in September 2021, as reflected in it delivering 3.9 percent Return on Asset (RoA) and 30 percent Return on Equity (RoE) during Q4 of FY23, highlighted ICICI Securities.

“With sustained improvement in core operating performance and visibility on credit cost normalisation, we maintain BUY with a revised TP of Rs40 (earlier Rs35), as we now value the stock at 1.5x Sep’24E BVPS vs Sep-23 BVPS earlier,” said ICICI Securities.

Emkay

Ujjivan SFB reported a strong beat on PAT at Rs3.1bn in 4Q, mainly on higher other income and provision reversal. Credit growth (net) remained strong at 31% YoY, 9% QoQ in 4Q, led by healthy traction in MFI, said brokerage firm Emkay.

“Bank expects growth to remain robust at 25%, with increasing share of secured loans which, coupled with lower credit cost, should keep RoAs high & healthy. Bank has applied to the NCLT and expects reverse merger with the holdco to be completed by Sep-Dec ’23. Factoring-in the earning upgrades and higher P/ABV at 1.3x, we revise our TP upwards to Rs38/share (vs Rs33), while upgrading the rating to BUY from Hold,"