Synopsis: Axis Capital recommends a Buy on Ujjivan Small Finance Bank, citing strong growth, improving asset quality, rising secured loans, and a stable outlook, with 31.62% upside potential.
This Small-cap Bank Stock, engaged in providing banking and financial services, including microfinance, loans, and deposit products to underserved and low-income customers, is in focus after Axis Capital gave a Buy target of Rs. 77, which has an upside potential of 31.62 percent.
With a market capitalization of Rs. 11,678.93 crore, the shares of Ujjivan Small Finance Bank Limited were currently trading at Rs. 58.50 per equity share, down nearly 3.05 percent from its previous day’s close price of Rs. 60.34.
What is the News?
Axis Capital, a prominent brokerage firm, has recommended a “Buy” call on Ujjivan Small Finance Bank Limited with a target price of Rs. 77 per share, indicating an upside potential of 31.62 percent from its current price of Rs. 58.50 per share.
Axis Capital has upgraded Ujjivan Small Finance Bank to “Buy” as the bank is steadily transforming into a more diversified lender. It is reducing dependence on unsecured microfinance loans and increasing its secured loan share, which has already reached around 49 percent and is expected to grow further in the coming years. This shift should make the business more stable and less risky over time.
The bank is also showing strong growth, with loans rising 26 percent year-on-year and disbursements hitting record levels. Collection efficiency is very high at about 99.8 percent, indicating good asset quality. Along with expected improvement in CASA deposits and a likely capital raise to support expansion, these factors together support a positive outlook and justify the upgrade.
Business Highlights (Q3FY26):
Ujjivan Small Finance Bank Limited delivered a strong performance in Q3FY26, showing steady growth across its key business areas. The total loan book rose to Rs. 37,057 crore, marking a 22 percent increase compared to last year. The secured loan book grew even faster to Rs. 17,825 crore, up by 49 percent year-on-year, reflecting a greater focus on safer lending practices. This balanced growth highlights the company’s strategy of expanding while maintaining stability.
At the same time, asset quality improved, with GNPA at 2.4 percent and NNPA at 0.6 percent, both lower than the previous year. This indicates better risk management and healthier loans. Total deposits also increased by 22 percent to Rs. 42,223 crore, showing strong customer confidence. Overall, the company is growing steadily while improving its financial strength and managing risks effectively.
Company Overview:
Ujjivan Small Finance Bank Limited (Ujjivan SFB) was incorporated on July 4, 2016, and is an Indian small finance bank headquartered in Bengaluru, Karnataka. It focuses on serving financially underserved and unserved customer segments, promoting financial inclusion through accessible retail and microfinance-based products across India.
Recent Quarter Results:
Coming into financial highlights, Ujjivan Small Finance Bank Limited’s Net Interest Income has increased from Rs. 886.74 crore in Q3 FY25 to Rs. 1,000.47 crore in Q3 FY26, which has grown by 12.83 percent. The net profit has also grown by 70.98 percent from Rs. 108.62 crore in Q3 FY25 to Rs. 185.72 crore in Q3 FY26.
Ujjivan Small Finance Bank Limited’s Net Interest Income has grown at a CAGR of 27.04 percent over the last three years.
In terms of return ratios, the company’s ROCE and ROE stand at 8.53 percent and 12.4 percent, respectively. Ujjivan Small Finance Bank Limited has an earnings per share (EPS) of Rs. 2.55, and its debt-to-equity ratio is 6.77x.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
