Ujjivan Small Finance Bank Shares Gain As Analysts Up Targets After Q1
Here's what brokerages have to say about the company's Q1 earnings and growth prospects.
Shares of Ujjivan Small Finance Bank Ltd. gained as analysts raised price targets for the company after the first quarter citing better asset quality, lower credit cost, and robust debt collection.
June-Quarter FY23 Results
Net profit at Rs 202.94 crore against loss of Rs 233.48 crore a year ago. (Bloomberg consensus estimate: Rs 107 crore)
Interest income at Rs 905.37 crore compared with Rs 641.66 crore a year ago.
Net interest margin at 9.6% versus 8% as of June 2021.
Gross NPA at 6.51% against 7.34% as of March 2022.
Net NPA at 0.11% against 0.61% as of March 2022.
Provisions eased to Rs 39 lakh from Rs 43.79 crore in the preceding three months.
Shares of the lender rose as much as 5.24% intraday before closing with 3.15% gains. Since its results on Tuesday, the stock has climbed 13%. Ujjivan Small Finance Bank shares have risen for six straight sessions, up nearly 24% during the period.
The trading volume was more than 10 times the 30-day average, when markets closed. The Relative Strength Index was at 86, suggesting the stock may be 'overbought'.
Of the 15 analysts tracking the company, 14 maintain a 'buy', one recommends 'hold', according to Bloomberg data. The 12-month consensus price target implies an upside of 28%.
Here's what brokerages have to say about the company's Q1 earnings and growth prospects.
YES Research
Upgrades stock from 'add' to 'buy', raises target to Rs 26 from Rs 22, an implied upside of 33.68%.
Lower-than-estimated credit cost, strong collection trends aided PAT.
Earnings estimates undergo significant upgrades due to low credit cost assumptions.
Right time cyclically to upgrade the stock to 'buy', considering robust collection trends.
Substantial provisions on stress pool, rise in recoveries and encouraging repayment pattern augurs well for the company.
A capital-raise to meet market regulator's criteria is impending.
Axis Research
Upgrades to 'add' from 'reduce', raises target price from Rs 18 to Rs 21, an implied return of 9.95%.
The stock is ripe for re-rating after Q1 beat.
Strong credit growth, pickup in disbursements, robust operating performance, low provisions and improvement in asset quality augur well for the company.
The bank will shift focus to sustaining growth momentum as asset quality concerns are largely addressed.
ICICI Securities
Reiterates 'buy', raises target to Rs 25 from Rs 20, an implied return of 28.53%
The company's core operating performance remained strong due to rebuild in business volumes, asset quality improvement and strong team, after the 100-day action plan implemented last year.
Strong growth in AUM of loans to new customers in micro-banking, fall in stressed asset portfolio and fall in cost/income ratio augur well for the company.
Rising visibility on credit cost normalisation is a positive.
Emkay
Upgrades stock to 'hold', raises target to Rs 18 from Rs 14, still an implied downside of 7.22%.
NII growth, negligible loan loss provisions aided PAT.
Raises earnings estimate for FY23/24/25 by 112%/80%/37%, to factor in higher growth, better margins.
The bank needs to fasten portfolio diversification away from MFI.
Kotak Institutional Equities
Retains 'buy', raises target to Rs 22 from Rs 20, an implied upside of 13.11%
Asset quality performance was strong with further decline in bad loans.
The company is firmly on track for growth and could turn a corner as Covid-induces stress fades.
The company is overcoming twin challenges of Covid-induced asset quality and management change after CEO's exit.
Upgrades earnings estimates to factor in low credit cost.