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By Gaurav Bora, Market Expert
1. Ujjivan Small Finance Bank Ltd, incorporated in 2017 and subsidiary of Ujjivan Financial Services Ltd, is one of the leading small finance bank. Ujjivan is doing an IPO to meet the RBI regulation which requires the Small Finance Banks to list within a period of 3 years post achieving a net worth of 500 Crores. Ujjivan has a presence across 24 states with major focus in Tamil Nadu, Karnataka and West Bengal which contributed 46% business. Ujjivan is operating through 411 Branches and 141 Unbanked Rural Centers, serving 49 lac customers.
2. Ujjivan provides a variety of banking services to mass market customers who are financially unserved and underserved in India which economically active poor who were not adequately served by financial institutions (which is biggest untouched potential market space).
3. Ujjivan has a well-diversified offering of asset and liability products. Its current AUM is 12900 crore in which 79% share is micro finance business. Ujjivan has focusing on Affordable housing, MSE segments and vehicle finance mainly on 2-Wheeler and electric 3-wheeler.
4. If we compare Ujjivan with its peers likes Bandhan Bank, Equitas Holdings & AU Bank then it has better Net Interest Margins and Net NPA (0.3%) which is lowest amongst peers. It enjoys highest PCR 61.1% among its peers (The provision coverage ratio (PCR) gives an indication of the provision made against bad loans from the profit generated). Overall Asset Quality wise Ujjivan is looking very healthy and performing better than its peers.
5. Reasonable valuation at the upper price band, the issue is valued at 2x Price/Book on FY20 post issue diluted basis. Valuations are giving comfort for investor at this price; improving financials and asset quality are indicating potential upside in stock in coming time.
Our View:
Subscribe for listing gains we are expecting min 50% listing gains, long term investors can hold it for capital appreciation.
Ujjivan Small Finance Bank IPO :
| Issue Open | Dec 2, 2019 – Dec 4, 2019 |
| Issue Type | Book Built Issue IPO |
| Issue Size | Aggregating Up To 750.00 Cr |
| Face Value | Rs 10 Per Equity Share |
| Issue Price | Rs. 36 to 37 Per Equity Share |
| Market Lot | 400 Shares |
| Min Order Quantity | 400 Shares |
| Listing Date | BSE, NSE |
Ujjivan Small Finance Bank Timetable :
| Bid/Offer Opens On | Dec 2, 2019 |
| Bid/Offer Closes On | Dec 4, 2019 |
| Finalization of Basis of Allotment | Dec 9, 2019 |
| Initiation of Refunds | Dec 10, 2019 |
| Credit of Shares to Demat A/C | Dec 11, 2019 |
| IPO Shares Listing Date | Dec 12, 2019 |