Ujjivan Financial Services is an Indian microfinance services company primarily based on the joint liability group lending model for providing collateral free, small ticket-size loans to economically active poor women. They also offer individual loans to Micro & Small Enterprises (MSEs), will be launching public issue on April 28, 2016.
The issue consists of fresh issue (of Rs 3.58 billion) and an offer for sale of Rs 5.24 billion (at the higher price band) thus totaling Rs 8.82 billion.
Commenting on the Ujjivan Financial Services IPO, Antique Stock Broking, said, ''Given the niche customer focus, the profitability of small finance banks will be higher than that of conventional banks but lower than established NBFCs. However, for technical reasons, their RoEs will be suppressed over FY17-18. For a well established player like Ujjivan, valuations at 1.6x post money book are reasonable, especially considering the fact that it strong growth and RoAs in excess of 2% even after conversion to a small bank. We recommend Subscribe to the issue.''
Meanwhile, Ashika Research - Equities, said, ''We believe that the company will successfully transform and emerge as a successful SFB. On the valuation front, at the higher price band of Rs 210, the issue is priced at P/B of 1.6x post issue BV and appears to be attractive compared to listed players Equitas Holdings (2.44x), SKS Microfinance (6.2x 9MFY16) and Cholamandalam Investment and Finance (3.17x 9MFY16). Thus, we advise our investors to 'SUBSCRIBE' for the issue for a long term perspective.''
Mehta Equities, said, ''Considering Indian micro finance growth prospects we see Ujjivan is well placed to tap the untapped opportunity as it has sound management team with extensive experience in the banking and financial services space, wide geographic reach and customer base are likely to facilitate a smooth transition into a small finance bank. As on date Ujjlvan Is the third largest MFI In the country and commands about 11% market share of the NBFC-MFI business in India. At the upper band of Rs 210, the valuation works out to be about 1.4x the FY-17 bookvalue (post-issue). On valuations per se it Is comforting us when compared with other listed players. Hence recommend investors to 'Subscribe' Ujjivan Financial Services IPO for healthy listing prospects.''
Dalal & Broacha Stock Broking, said, ''Going forward, Ujjivan's reach and experience in the MFI segment can be important factors in building a diversified book in the underserved small ticket size borrowers segment not actively targeted by most banks. Being SFB it will be regulated by RBI directly thereby reducing Political risks. At 1.7x post IPO book (assumed at higher end) we opine long term investors may subscribe for listing gains. We recommend our investors to subscribe the issue.''
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