Ujjivan SFB shares rise 5% post Q4 results. Should you buy it?

Shares of Ujjivan Small Finance Bank rallied 5% to Rs 30.7 in Friday's intraday trade on BSE after the company reported a nearly two-and-a-half-fold jump in net profit for the March quarter at Rs 310 crore, backed by steady business expansion, asset quality improvement and lower credit cost.


Net interest income for the lender grew 36% at Rs 738 crore with its gross loan portfolio rising 33% to Rs 24,085 crore.


The bank's operating profit was at Rs 411 crore, reflecting a 56% rise over Rs 264 crore. There was a provision write-back of Rs 19 crore against Rs 90 crore provisions in the year-ago period.


At 11 am, the stock was trading 4.2% higher at Rs 30.5 over its last day's closing price of Rs 29.2 apiece. It has also risen 90% in the last one year.


Should you buy, sell or hold Ujjivan Small Finance Bank stock? Here's what analysts say:


JM Financial

JM Financial maintained its buy rating on Ujjivan SFB with a target price of Rs 38.


"Ujjivan SFB has exhibited healthy operational performance with PPOP at Rs 4.1bn (5.6% QoQ) aided by robust NII growth of (6% QoQ) supported by other income growth (29% QoQ). We believe the stock delivers return metrics on the back of a benign credit environment, lower credit costs and granular liability franchise," JM Financial said.


ICICI Securities

ICICI Securities maintained its buy rating on Ujjivan SFB with a target price of Rs 40.


"Ujjivan Small Finance Bank has sustained its improving trajectory in profitability, backed by its revised business strategy post the management change in Sep’21, as reflected in it delivering 3.9% RoA and 30% RoE during Q4FY23. The improved performance is an outcome of the bank’s 100-day action plan implemented in Oct’21 with three key objectives: i) Rebuild business volumes, ii) improve asset quality, and iii) build and retain a good long-term team," it said.


YES Securities

YES Securities retained its buy rating on Ujjivan SFB with a target price of Rs 45.


"Trends in loan growth, deposits, portfolio spread, fee income and asset quality are expected to remain sturdy through FY24, possibility resulting in stronger-than-guided RoE. It is noteworthy that Ujjivan SFB’s portfolio has demonstrated stronger recovery from the Covid impact and thus cumulative credit cost from this event has been much better than industry and even better than large NBFC-MFIs," it said.


(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)