Ujjivan Financial hits 52-wk high on heavy volumes; zooms 102% in 6 months




Shares of (UFSL) hit a 52-week high of Rs 200.65 after they rallied 9 per cent on the BSE in Wednesday’s intra-day trade on the back of heavy volumes. The stock of the non-banking finance company (NBFC) surpassed its previous high of Rs 191.80, touched on November 1, 2021. In comparison, the S&P BSE Sensex was up 0.09 per cent at 59,081 points at 10:54 am.


Trading volumes on the counter nearly doubled over their two-week average trading volumes. A combined 2.3 million equity shares had changed hands on the NSE and BSE till the time of writing of this report.


Meanwhile, in the past six months, the market price of UFSL has zoomed 102 per cent as compared to 8 per cent rise in the S&P BSE Sensex. The stock had hit a record high level of Rs 547 on July 28, 2016.


UFSL is a core holding company of Ujjivan Small Finance Bank Limited (Ujjivan SFB), holding 83.32 per cent stake. As a part of the banking license requirement, UFSL has floated its wholly owned subsidiary which had commenced its banking operations from February 1, 2017. Ujjivan SFB is a mass market focused bank in India, catering to financially unserved and underserved segments and committed to building financial inclusion in the country.


Analysts at HDFC Securities feel that the holding company discount will gradually narrow as the time passes because the company has already announced that it wants to reverse merge itself with Ujjivan SFB. Ujjivan SFB is looking to raise Rs 600 crore of fresh capital from institutional investors to comply with the minimum public shareholding norms, post which the bank will approach the regulators for the merger scheme.


Covid-led weak economic scenario had impacted the Micro Finance Industry (MFI) which also affected Ujjivan SFB’s performance. There was a sharp spike in non-performing assets (NPAs) and higher provisions due to which it had reported loss of Rs 415 crore in FY22.


However, analysts at the brokerage firm feel that the worst is over and the situation has already started to improve. With the economy picking up again and the rural demand on the rise, the growth outlook looks positive for the short to medium term. “RBI, in March 2022, issued new directions for microfinance lending and has eased microfinance regulations. For the long term, we feel that the opportunity is huge as penetration in Indian market is still low,” HDFC Securities said in its initiating coverage report dated August 1, 2022.


With the economy gradually and steadily recovering and Ujjivan SFB witnessed a remarkable turnaround during the last quarter of FY21-22 and the first quarter of the FY22-23. The management is confident that the future of the Bank looks brighter than ever before as credit demand is back to normalcy. “We are confident that the momentum built in the last six months would continue in the current fiscal and in the years to come which would enable our Bank to attain newer heights in terms of growth, size, deposit mobilization and profitability,” UFSL said in its FY22 annual report.


Meanwhile, the stock of Ujjivan SFB was trading 4 per cent higher at Rs 21.35 on the BSE. It had hit a 52-week high of Rs 23.75 on October 19, 2021 and a record high of Rs 63 on December 12, 2019.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor





Source link

Comments are closed.