Ujjivan Financial Services Ltd Share Price Target 2024, 2025 to 2030

jjivan Financial Services initiated operations as a Non-Banking Financial Company Micro Finance Institution (NBFC-MFI) after securing registration from the Reserve Bank of India in September 2013. Subsequently, it obtained RBI approval to establish Ujjivan Small Finance Bank, its wholly-owned subsidiary, which commenced operations in February 2017. This transformation led to the surrender of its NBFC-MFI license, receiving approval as a Core Investment Company (NBFC-ND-SI-CIC) from the RBI in October 2017.

The company’s primary value stems from its substantial stake of 83.32% in Ujjivan Small Finance Bank, which boasts a significant market presence. Operating across 575 branches spread over 248 districts in 24 Indian states and union territories, the bank serves approximately 65 lakh customers..

Despite improvements in asset quality with GNPA reducing to 7.3% from 7.1% and NNPA dropping to 0.6% from 2.9% in March 2021, the bank faces challenges in key financial ratios. The Cost of Funds stands at 6.3%, while the Net Interest Margin remains at 8.8%. However, the Return on Assets (ROA) and Return on Equity (ROE) exhibit negative trends at (1.9%) and (13.8%) respectively.

To further its growth trajectory, Ujjivan Small Finance Bank underwent an initial public offering (IPO) in FY 2019-20, issuing approximately 20 Crore Equity Shares at an offer price of INR 37 per share. Additionally, it is focusing on expanding its product range, enhancing digital banking services, and nurturing a robust base of retail deposits for sustained asset growth. With plans to amalgamate Ujjivan Financial Services Limited and Ujjivan Small Finance Bank, the company aims to issue new equity shares to shareholders as part of this consolidation.

1. Ujjivan Financial Services, a registered NBFC-MFI since 2013, obtained RBI approval to establish a Small Finance Bank.
2. The company shifted its business operations to its subsidiary, Ujjivan Small Finance Bank, commencing in February 2017.
3. Post this transition, Ujjivan Financial Services relinquished its NBFC-MFI license and secured NBFC-ND-SI-CIC registration from the RBI.
4. It obtained the Core Investment Company registration on October 10, 2017, following the surrender of its NBFC-MFI license.
5. Ujjivan Financial Services holds a market cap of ₹6,809 Cr, with a current stock price at ₹559.
6. The stock displays a Price/Earnings ratio of 8.17 and a Book Value of ₹299.
7. Notably, it offers a Dividend Yield of 0.89%, reflecting a Return on Equity (ROE) of 32.1% and a Return on Capital Employed (ROCE) of 10.3%.
8. Recent transformations showcase its strategic shift and regulatory adaptations, aligning with its banking and financial services.

1. Q2 FY2020 recorded a PAT of 93 Crores, showing a 51% YoY increase in disbursements.
2. Gross advances surged by 55% YoY, reaching Rs. 12,864 Crores.
3. Non-micro banking business constitutes 21% of the total advances.
4. Retail deposits exhibited a remarkable 237% YoY growth, totaling Rs. 4248 Crores.
5. CASA deposits contributed 12% to the overall deposit base.
6. Micro banking business marked a 38% YoY growth, with a gross advance of Rs. 10,191 Crores.
7. The credit book maintains robust quality, reflected in a stable GNPA of 0.9% and NNPA of 0.3%.
8. Overall, the quarter showcased substantial growth in disbursements, advances, retail deposits, and micro banking business.

Shareholding Pattern

Ujjivan Financial Services showcases a mixed performance. The company’s financials display both strengths and weaknesses. On the positive side, there’s consistent growth in gross advances, especially in the micro-banking segment, reflecting a strong market presence and potential. However, the recent quarterly performance marked a decline in net profits, signaling potential challenges or issues affecting profitability.

Key financial metrics, like Return on Capital Employed (ROCE) at 10.29%, depict moderate performance compared to peers. The company’s Price-to-Earnings (P/E) ratio at 8.17 is relatively lower, indicating a potentially undervalued stock. Additionally, with a dividend yield of 0.89%, it may attract income-oriented investors.

However, the recent negative growth in net profits (-12.12% YoY) and fluctuations in quarterly sales and expenses could raise concerns about the company’s stability and growth trajectory. It’s crucial to investigate the reasons behind these fluctuations and their potential impact on future earnings.

Considering the market scenario and the company’s financials, investing in Ujjivan Financial Services might carry moderate risk. Investors should carefully weigh the company’s growth potential against its current financial challenges. Conducting further research on their business strategies, market outlook, and plans to address recent profit declines would provide better insight into the company’s future performance and its potential as an investment option. Consulting with a financial advisor or analyst before making any investment decisions is advisable to ensure alignment with your investment goals and risk tolerance.