CMP: ₹45.85
Ujjivan Small Finance Financial institution hosted an analyst meet not too long ago to showcase its asset verticals, liabilities and know-how features. With Mr Sanjeev Nautiyal anticipated to take cost as MD & CEO in July 2024, administration reiterated its give attention to mortgage combine diversification, enhancing deposit franchise and enhancing productiveness. Administration additionally highlighted larger delinquencies in choose pockets in a couple of states, leading to a assessment of FY2025 steerage.
We’ve revised our estimates, however retain ADD score with a FV of ₹57 (₹62 earlier), valuing the financial institution at about 1.5X June 2026 ebook and round 8X earnings for medium-term RoEs of 18-19 per cent. Credit score bureau information present indicators of over-lending in microfinance in choose states (Exhibit 6), however the magnitude appears restricted as of now.
Delinquencies for marginal debtors can rise if lenders withdraw liquidity concurrently, and, therefore, we are going to cautiously assess the scenario on the bottom within the subsequent few months. Nevertheless, in our view, the eventual influence on credit score prices is perhaps restricted until there’s a set off for widespread delinquencies (macro deterioration or geopolitical occasion).
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