Ujjivan SFB: 24% Growth Powerhouse for Shareholders

Ujjivan Small Finance Bank stands out as a high-growth player among small finance banks, mirroring HDFC Bank's early trajectory with strong expansion and solid fundamentals. Its recent performance signals robust value creation for shareholders through loan and deposit growth, improving asset quality, and attractive valuations. ​ Strong Financial Momentum The bank's gross loan book hit ₹37,055 crore in Q3 FY26, up 21.6% year-on-year, driven by 55% higher disbursements at ₹8,311 crore. Deposits surged 22.2% to ₹42,219 crore, boosting liquidity. In Q2, net profit rose 18.2% quarter-on-quarter to ₹122 crore, with secured loans now at 46.8% of the book, reducing risks. ​ Strategic Shifts Boost Value Ujjivan focuses on secured lending like vehicle finance and agri loans, targeting 65-70% mix by FY30 from 45%. This lowers yield but enhances capital efficiency and stability. Micro-banking individual loans grow faster than group loans, aiding graduation to higher-value customers. Branch expansion supports 20-25% annual loan growth. ​ Shareholder Benefits Shine Stock rose 75% in the past year, trading undervalued by 19% at around ₹60 versus intrinsic value of ₹74. Projections show 22% CAGR in net income over three years. Low NPAs at 2.5-3.98% and collection efficiency ensure steady profits, benefiting holders via capital gains and potential dividends. ​ Minimal Risks, High Rewards Asset quality holds firm amid MFI challenges, with credit costs at 2.3-2.4%. Ambitious CASA growth faces competition, but retail deposits and 97 lakh customers provide edge. Overall, this positions Ujjivan as a beneficial bet for shareholders seeking 24% sector growth without major downsides.