Both banks are doing good in their expertise segments. Ujjivan is microfinance leader and has affordable housing book. They have not been successful in MSME financing till now. Equitas is very strong in SME loans and Vehicle finance alongwith affordable housing. Today entire financial space is talking about lack of credit in MSME space. Key for Ujjivan long term sustained performance is Diversification to secured lending to avoid major impact from macro economic shocks and key for Equitas is maintaining NIM’s, cost to income. Ujiivan at present has very low NPA ratio plus operating leverage is playing out since microfinance is low cost business. Seeing the past track, microfinance is growing strongly now but it is difficult to grow this business at 25% CAGR since it is unsecured and dependent upon economy doing well since you are lending at the bottom of pyramid. At present, Ujjivan looks cheaper than Equitas. Equitas is much cheaper than AU SFB. So, compare Ujjivan with Utkarsh/Credit access/Fusion/Suryodaya and Equitas with AU SFB. I am invested in both since both have a good long term journey as these banks are addressing informal economy which is very tough for large banks since they lack experience and focus being too big in formal economy. I personally feel, India’s growth in next 2 decades shall be much higher in Tier 2, 3 and below markets. In last 7 years, no other SFB has been able to grow deposits, assets, retail business so well as compared to Equitas/Ujjivan/AU. So credit has to be given to these banks as being leaders in small finance space which are still building the bank franchise.
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