On a firm recovery path; ‘Universal Bank’ license long awaited
Management Meet Update
We hosted a call with Vibhas Chandra, Head – MFI and Gold loans, Ujjivan SFB, along with the IR team, to discuss growth/asset-quality trends and potential impact of the proposed Bihar MFI Ordinance, upcoming multi-state elections, and business disruption due to the ongoing US-Iran conflict. The management indicated that growth and asset quality recovery are on track for now across states, while it expects minimal impact from seasonal factors (heat wave) or the restricted movement around the elections, in 1Q. On the other hand, impact of the MFIN guardrail is decelerating, with the 3+ lender portfolio set to become virtually zero over coming quarters. Impact of the recently reported partial shutdown of restaurants and small businesses too is expected to be limited, assuming that the geo-political situation stabilizes soon. As part of its long- standing strategy, Ujjivan plans accelerating growth in secured lending (including gold loans) without diluting credit filters, building on its initial portfolio experience. On the ‘Universal Bank’ license, the management remains hopeful based on reduced RBI query intensity, though it has not committed to any timeline. We retain BUY on the stock with Dec-26E TP of Rs72 (implying 1.6x FY28E ABV).
