IGI Logo

Ujjivan SFB has exhibited healthy operational performance with PPOP at INR 4.1bn (5.6% QoQ) aided by robust NII growth of (6% QoQ) supported by other income growth (29% QoQ). While NIMs contracted by 30bps QoQ to 9.1% impacted by sharp uptick in volume of deposits and rising CoF. AUM for 4QFY23 stood at INR 241bn (+33% YoY, +10% QoQ) driven by strong disbursements of INR 60bn (23% YoY, 24% QoQ) with highest ever disbursements recorded for housing and FIG segment. Deposit growth remained strong at +40% YoY, +10% QoQ with increased in share of retail TD and CASA which stands at 66% (+160bps QoQ) and CASA ratio at 26.4%. Asset quality remains pristine with GNPA/NNPA at 2.6/0.04% (-80bps/-1bps QoQ) and restructured pool at 0.9% of gross advances and PCR at 98.6%. Mgmt. is optimistic sustaining momentum on advances and deposit growth with credit cost below 100bps. We build CAGR AUM growth of 27% and avg. credit cost at 115bps over FY24-25e. We believe the stock to deliver on return metrics on the back of a) benign credit environment, b) lower credit costs and c) granular liability franchise. We maintain BUY with a TP of INR 38 valuing it at 1.14x FY25E BVPS.

* Strong AUM and deposit growth: AUM for 4QFY23 stood at INR 241bn (+33% YoY, +10% QoQ) driven by strong disbursements of INR 60bn (23% YoY, 24% QoQ) with highest ever disbursements recorded for housing and FIG segment. AUM growth was driven by MFI group loans, individual loans, housing loans, housing and FIG segment which grew at 11%/19%/8.2%/12% QoQ. Management indicated that incrementally secured loans will grow at a faster pace and they are also targeting to reduce MFI contribution to ~50% over next 3-4 years period. Deposit growth remained strong at +40% YoY, +10% QoQ with increased in share of retail TD and CASA which stands at 66% (+160bps QoQ) and CASA ratio at 26.4%. The SFB is adequately capitalised with tier 1 capital at 22.7% and CAR at 25.8% hence no capital raise is expected in the near future. We have built CAGR AUM growth of 27% over FY24-25e

* Healthy operational parameters: Ujjivan SFB has exhibited healthy operational performance with PPOP at INR 4.1bn (89% YoY, 5.6% QoQ) aided by robust NII growth of (36% YoY, 6% QoQ) supported by other income growth (75% YoY, 29% QoQ). While NIMs contracted by 30bps QoQ to 9.1%, although mgmt. remains confident of sustaining NIMs above 9% with pass though of rate hikes with expected increase in CoF. PAT stood at INR 3.1bn (145% YoY, 6% QoQ) with lower credit cost assisted by significant improvement in asset quality with GNPA/NNPA at 2.6/0.04% (-80bps/-1bps QoQ) with restructured pool at 0.9% of gross advances and PCR at 98.6%. Mgmt believes that credit costs will be restricted below 100bps and opex to remain at similar levels. We build avg. credit cost at 115bps over FY24-25e and cost to income ratio at 53% over FY24-25e.

* Valuation and view: We believe the stock deliver to return metrics on the back of a) benign credit environment, b) lower credit costs and c) granular liability franchise. We maintain BUY with a TP of INR 38 valuing it at 1.14x FY25E BVPS.

To Read Complete Report & Disclaimer Click Here

Please refer disclaimer at https://www.jmfl.com/disclaimer

SEBI Registration Number is INM000010361

Above views are of the author and not of the website kindly read disclaimer