Ujjivan Small Finance Bank Q3 Results Review - Growth Outlook Strong, Maintain 'Buy': Axis Securities

Axis Securities Report

New product scale-up in the secured business along with focused efforts on building the liability effort should keep Ujjivan Small Finance Bank Ltd.'s business growth momentum strong over the medium term.

The reverse merger is nearing its completion and is expected to conclude by Q4 FY24 post the requisite approvals.

We largely maintain our net interest income estimates, while we revise our earnings estimations downwards by 2-3% over FY24-25E to reflect a slower-than-anticipated opex ratio improvement.

Valuation and recommendation

Ujjivan Small Finance Bank currently trades at 1.5 times September 2025E adjusted book value and we value Ujjivan Small Finance Bank at 1.8 times September 25E adjusted book value to arrive at a target price of Rs 64, implying an upside of 20% from current market price. We maintain our 'Buy' recommendation on the stock.

Key risks to our estimates and target price

• The key risk to our estimates remains a slowdown in overall credit growth which could potentially derail our earnings estimates.

• The scalability of new products and secured book remains a key monitorable.

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