Ujjivan Financial - Small Finance Bank


(Gurjot) #130

More than the collection efficiency, I thought the takeaway from the interview was ‘this year we’re going to clean up our books and this year is going to be tough’ so NPAs should be elevated throughout the year I’m assuming.


(Amit) #131

Looks like more near term pain…long term investors should buy on dips.


(Mayank Narula) #132

By nature of business of fast moving loans (avg maturity of 6-12 months), they can’t keep bad loans on books for long, unlike commercial banks. In my opinion, this should be seen as a positive for investors and also ratification for near-zero NPAs pre-demonetization. I am saying that because lots of analysts (like Ambit) have been skeptical of asset quality of MFIs.


(Gorthi) #133

What happening for Ujjivani nd Equitas Goldman Sachs sold Equitas shares of 17.67 lakhs share on 24 July @ 174.5. How do we interpret it. As a general thinking people like Goldman selling at 52 lows means there is something seriously Wrong with Ujjivan and Equitas.

Can Senior Board members share your thoughts.
Dis: Invested in Ujjivani and not Equitas.


(nil_71) #134

I am not invested n Ujjivan anymore but my feeling is-In India as long hangover of Loan Waiever is there, SFBs will continue to suffer. With so many state elections on the way. Also listen to HDFC Q1 call, even solvent farmers are not paying. Malaise is widespread and SFBs are the worst sufferers


(Gorthi) #135

That’s true 2018 Bigger states like Gujarat and Karnataka. Going for poles… People already started talking about Loan waiver in Karnataka… I am sure In Karnataka loan waiver scheme… would be there… Which is something I feel no one can stop…The.point is Ujjivani and Equitas can survive these and still maintain Growth nd Profitability…


(atulgupta80) #136

don’t read too much in their action. Have your own conviction. They have institutional imperative which we retail investor don’t have that’s one of our few edge over the.


(sarangg) #137

Huge writedowns as expected, but they look reasonable, like 4 months of PAT (of erstwhile SA entity) wiped out, so not a long term impairment. The best part about business like these is IMHO the short duration of loan book, so once pain is felt it is usually over, at least for that book and you don’t worry about writeoff’s continuing. In fact 64% PCR is much lower than NNPA, so might even get some provisions written back.

Looks like management is back on growth path since next quarter. 150bps CoF makes ~90cr PBT increase each year, so huge gain from SFB to be seen in 1 years time


(Ameya Dharmadhikari) #138

Investor Presentation http://www.bseindia.com/xml-data/corpfiling/AttachLive/7fae2573-f496-4205-b5b8-8875ada759e3.pdf


(Rohit) #139

Does that mean these are short term pain and business will be back to normal in next 1-2 year…or will be on growth trajectory due to small finance bank license. I dont have much understanding of the banking business

I am looking to buy more quantity for longer term , as stock has corrected almost 40-45% from top highs. I can see some value in it but due to lack of business understanding I am not getting courage to buy more.

Disc - Invested since IPO


(Mayank Narula) #140

You can go through this thread, thread on microfinance and thread on satin creditcare. Will give you much better understanding of the business and future prospects.


(TT) #141

How do you see value without understanding the business or banking itself?


(Santosh Dave) #142

@Rohitsharma
Hi Rohit,
There are no issues with the management. Not only Ujjivan but other SFCs are also suffering. Pl go through latest reply given on Ujjivan by @hitesh2710 Hiteshbhai on his thread. There are really good posts of @Yogesh_s on banking biz. if you really want to understand. Pessimissm gives opportunities, second with you.


(Rohit) #143

I do have basic understanding , however I am not an expert while analyzing the companies. The basic things which are tempting me to buy the stock is

  1. Stock trading approx 2 times book value.
  2. Small finance bank license
  3. Stock trading almost 40-45% down from highs. While whole market is up. The point is I cant see any other place where I can park my idle money , due to high valuations. And I dont see the Valuations higher here.
  4. Also while reading various threads I came to know that higher provisioning can lead to short term pain for 1-2 years , however once the books are cleaned , stock may come back to its growth trajectory.(I am ready to wait for 5+ years). So it seems a bargain to me to buy in Pessimism,
  5. Also , some people have mentioned here that the management is good , which is also a plus point.
  6. Interest rates going down (beneficial for financial companies)

(Rohit) #144

Thanks Santosh and Mayank for your inputs


(Mayank Narula) #145

To add to it, if you look really long term, 7-10 years, Ujjivan, Equitas and AU are at the same place where Yes, indusind and kotak were 10 years back. Here the advantage is, that they are catering to totally unserved market. ROE, ROA etc should be left aside while comprehending the size of opportunity.
Status- invested and waiting for my annual bonus to put more money. :slightly_smiling_face:


(madhavikkutti) #146

Hi Rohit, I agree with you on all the 6 points mentioned by you and also believe in the Ujjivan long term story, but is it a good approach to park your money in a stock which is not likely to appreciate in the next 1-2 years? It may be possible that, over the next couple of quarters, the stock price goes down significantly also and due to that overhang, the price might not reach the levels that you expected after 5-6 years also. If I were in your position, perhaps I would have invested that money on stocks like PNB Housing Finance or Capital First (just to give you couple of examples) for the next one year and meanwhile constantly monitor Ujjivan’ s performance and switch to that stock at appropriate time. The above stocks, though perceived to be as expensive, are giving me earnings visibility currently.


(Gaurav Agarwal) #147

The management has missed the information (graph) on collection efficiency whereas Bharat Financial has presented a very nice table giving all the details. We have no clue how the GNPA increased to 6.16% from 3.69%.

I could not find information about the overall collection efficiency. Just to make it nice the management has given collection efficiency of new business 99.76%. As if at will they can let go of their earlier book.


(Subham) #148

Overall collection efficiency is at 96%. They expect 4% to be the total credit cost for FY18.


(rkothuri) #149

http://m.economictimes.com/markets/expert-view/focusing-on-mse-and-housing-in-next-2-years-samit-ghosh-ujjivan-small-finance-bank/amp_articleshow/59911260.cms