Ujjivan Financial, SFB in focus: Stocks hit 52-week highs in volatile mkt

Shares of Ujjivan Financial Services (UFSL), and Ujjivan Small Finance Bank (SFB) hit their respective 52- week highs on the BSE in Friday’s intra-day trade, extending their previous day’s rally, after Ujjivan SFB reported a healthy business update for the September quarter (Q2FY23).

Among individual stocks, Ujjivan SFB rallied 8 per cent to Rs 26.40 in the intra-day trade today, surging 21 per cent in the past three trading days, amid heavy volumes. The stock surpassed its previous high of Rs 25.85, which it had touched on September 13, 2022. A combined 10.3 million equity shares had changed hands on the NSE and BSE till 09:42 AM today.

UFSL, meanwhile, hit a 52-week high of Rs 244.15 as the stock soared 4 per cent in Friday’s intra-day trade, soaring 18 per cent in the past three days. In comparison, the S&P BSE Sensex was down 0.36 per cent at 58,010 points.

In Q2FY23, Ujjivan SFB’s gross loan book jumped 44 per cent year-on-year (YoY) to Rs 20,938 crore on the back of sustained growth in disbursements, which grew 56 per cent YoY to Rs 4,867 crore. Deposits grew 45 per cent YoY to Rs 20,389 crore, driven by strong momentum in retail deposits.

Collection efficiency was at 100 per cent for the month of September 2022, with restructured and NPA book showing healthy collections. The bank said it continues to focus on stressed buckets, and reducing incremental overdues. Asset quality continued to improve with PAR/ GNPA further declining to 6.1 per cent/ 4.4 per cent from 7.9 per cent/ 5.9 per cent, respectively, QoQ

In the past three months, the stock price of Ujjivan SFB, and UFSL have zoomed nearly 60 per cent each, as compared to 7 per cent rise in the S&P BSE Sensex.

UFSL is a core holding company of Ujjivan SFB, holding 73.68 per cent stake. 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.

Meanwhile, the Bank has initiated the process of reverse-merger with its Holding Company to meet the above mentioned criteria. To this effect, the Boards of both the Bank and Holding Company have approved the scheme for amalgamation in its meeting dated October 30, 2021.

“Subsequent to the successful completion of the QIP last month, the Bank will seek various regulatory approvals from RBI, SEBI and stock exchanges, National Company Law Tribunal (NCLT), shareholders and creditors in the next few months. Post receipt of all regulatory approvals, the Bank will initiate processes relating to finalization of record date, approval from Registrar of Companies (ROC), issue of shares etc. to effect the merger. The entire process is expected to be completed within a time-frame of 12-14 months from the date of completion of QIP,” Ujjivan SFB had said in its FY22 annual report.