Shares of Ujjivan Small Finance Bank rose 8.01 per cent to hit a 52-week high level of Rs 61.38 in early trade. The market capitalisation (m-cap) of the firm rose to Rs 11,957.10 crore.
This comes after the firm witnessed a robust quarterly update marked by strong loan growth and improved asset quality.
Its total deposits grew 43 per cent on year to Rs 29,134 crore in the September quarter, while sequentially, they were up 9 per cent. Advances also surged 27 per cent YoY and 5 per cent QoQ to Rs 26,600 crore.
Meanwhile, Disbursements were up 18 per cent YoY at Rs 5,749 crore in the quarter gone by. On a sequential basis, they rose 9 per cent.
The bank’s asset quality also improved, as gross non-performing assets (NPAs) fell to 2.2 per cent from 2.4 per cent in the previous quarter. Gross NPAs stood at 4.4 per cent in the same quarter of the previous fiscal.
Ujjivan SFB has delivered multibagger returns to its investors, as it has delivered over 100 per cent returns in the past one year. Meanwhile, it has also surged nearly 130 per cent in the last six months and gained nearly 200 per cent in the past two years.
As per Trendlyne data, the average target price of the stock is Rs 53, which indicates a downside of 13 per cent from the current market prices. The consensus recommendation from 11 analysts for the stock is a ‘Strong Buy’.
The bank is also in the process of reverse merging with its holding company, Ujjivan Financial Services Ltd.
At present, Ujjivan Financial holds 73.68 per cent equity shareholding and 100 per cent of the preference shareholding in the small bank.
After the reverse merger with the holding company, Ujjivan Financial shareholders will receive 116 Ujjivan SFB shares for every 10 shares.
The company will convene the extraordinary general meeting (EGM) of its shareholders on November 3 or e-voting period. The ex date is expected to be announced after November 3, according to domestic brokerage Axis Securities.
The brokerage has recommended investors to buy the Ujjivan Financial stock to create a more economic way to buy Ujjivan SFB, at a 15 per cent discount. It has a buy rating on the Ujjivan SFB stock with a target price of Rs 60 per share.
“This provides an opportunity to buy Ujjivan Small Finance Bank shares at a discounted rate by going long on Ujjivan Financial Services. For every share worth Rs 5,200 (520×10) of Ujjivan Financial Services, shares worth Rs 6,032 will be issued (116×52) of Ujjivan SFB,” it said.
This represents an opportunity to buy Ujjivan SFB at a 15 per cent cheaper rate compared to buying directly from market, the brokerage noted.
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