Shares of this small-cap Bank under Rs 100 gets a Buy call for a potential upside of more than 40 percent. In the past six months, the Banking stock has gained over 85 percent return for its stakeholders.
Ujjivan Small Finance Bank Limited
With a market capitalization of Rs 10,254.65 crores, the stocks of Ujjivan Small Finance Bank Limited, a Private-sector Bank based in India, started their trading session on Wednesday at Rs 52.50 and currently trades at Rs 52.43, gaining 0.50 percent as compared to the previous closing levels of Rs 52.18 apiece.
Having a glance at the consolidated annual financials, the Bank has consistently increased its total income with the most recent being from Rs 3,172.69 crores during FY21-22 to Rs 4,754.19 crores during FY22-23. Moreover, the net profits of the Bank shifted from a loss of Rs 414.59 crores to a profit of Rs 1,099.92 crores keeping the timeframe the same.
Due to the favourable movements in numbers during the recent year, the basic profitability ratios such as the return on equity (RoE) and return on capital employed (RoCE) came in green in FY22-23 with the former reported at 33.75 percent, and, the latter, reported at 28.36 percent.
Bank-specific ratios such as the net Non-Performing Assets (NPAs) reduced drastically from 0.61 percent during FY21-22 to 0.04 percent during FY22-23. In addition, the Net Interest Margin (NIM) increased from 7.84 percent to 8.36 percent during the same period.
Having a positive outlook for the Bank, HDFC Securities gave a ‘Buy’ tag to the Bank stock with a target price of Rs 75 indicating a potential upside of around 43 percent as compared to the current stock price level prevailing in the market.
The rationale for providing such a recommendation pertains to strong disbursals, healthy collections, and customer franchise rejig enhancing the Bank’s return ratios.
Keeping a purview of one year, the Bank stock has provided multibagger returns of 112 percent, i.e., if someone had invested Rs 1 lakh a year ago, it would have converted to Rs 2.12 lakhs.
As per the latest shareholding pattern data for the quarter ended September 2023, the Bank’s Promoters hold a 73.66 percent stake followed by the Public (retail) investors holding a 18.59 percent stake in the Bank.
Ujjivan Small Finance Bank Limited is a mass-market-focused Bank based in India that caters to the unserved and underserved segments of society and is committed to building financial inclusion in the country. The Bank operates through a wide range of segments including Treasury, Corporate Banking, Retail Banking, etc.
Written by Amit Madnani
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