Shares of Ujjivan Small Finance Bank shares rose nearly 9% in early trade on Friday after the bank reported a 44% increase in gross loan book at ₹20,938 crore at the end of September 2022. The stock was trading at 25.25 on the BSE at11:00 a.m., up 3.48%.
The stock opened higher at 24.75 against the previous close of ₹24.30 and rallied further to hit a 52-week-high of ₹26.45. In the last three trading sessions, the stock is up by nearly 14%. The stock's rally began in early July, when it moved from ₹14.50 to the current level of 25.25, representing a 74.13% return.
On the other hand, Ujjivan Financial Services also reached a fresh 52-week-high of ₹244.40 in Friday's trade.
On Thursday, the bank said the growth in the loan book was driven by micro, affordable housing and individual borrowings. The bank advances are up 22% from ₹14,514 crore as of September 2021 on the back of sustained growth in disbursements, which grew by 56% YoY to ₹4,897 crore.
The bank crossed the ₹20,000 crore milestone in both advances and deposits, showing robust growth, "the bank said in a regulatory filing on Thursday. Deposits moved up by 45 per cent to ₹20,389 crore, driven by strong momentum in retail deposits, which were up 71 per cent, it said.
The bank's current account savings account (CASA) component rose by 73 per cent to ₹5,492 crore as against ₹3,166 crore. The CASA ratio stood at 26.9 per cent. The bank said its collection efficiency was maintained at 99% plus, with restructured and NPA books showing healthy collections.
In Q1FY23, the bank reported its highest-ever quarterly profit at ₹203 crore on higher interest income and a fall in bad loans as well as strong disbursements. Sequentially the net profit was up by 60.4% from 126.52 crores.
The bank reported a net loss of ₹233 crore for the June quarter of last year. Losses persisted for the bank for the following two quarters but finally ended with a net profit in the March 2022 quarter.
In Q1 FY23, the lender's interest income increased by 41.1% to ₹905.37 crore from ₹641.66 crore in Q1 FY22. In contrast, other income increased to ₹95.1 crore from ₹73 crore.
Following its interaction with the Ujjivan Small Finance Bank team, the domestic brokerage firm Axis Securities has given a 'buy' call on the stock with a target price of ₹31/share.
"We believe the growth runway remains large, offering ample opportunities to build a scalable book and expect UJSFB to clock a healthy advance growth of 28% CAGR over FY22–25E." With the focus now shifting towards the secured book, we believe the growth in the secured portfolio will outpace the MFI loan growth. "In Q2FY23, the growth momentum has been sustained and we expect the bank to deliver yet another robust quarter operationally," said Axis Securities in its company update report, dated September 17.
The brokerage believes UJSFB is progressing well in its attempt to reduce its dependence on the MFI book in the overall portfolio by not aggressively chasing growth in the secured products as it is currently in the transition phase as it realigns its focus on the customer segment.
An average of 12 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
