Ujjivan Financial shares rise 10.29% when they debut

Ujjivan, the second of 10 licensed small finance banks (SFBs) to go public, listed on ?? 227 a share on BSE, from its offer price of ?? 210 per share. The script hit a high and a low of ?? 244 and ?? 217.05, respectively, in intraday trade.

Closure of actions at ?? 231.60 each on BSE, up 10.29%.

The company has awarded shares to investors at the high end of its ?? 207-210 per share price range.

On Monday, the Reserve Bank of India (RBI) said the overall investment cap for foreign institutional investors under the portfolio investment program will remain at 49%. The RBI further indicated that the overall limit for the NRI investment should not exceed 10%.

Analysts expected Ujjivan to have a positive rating, citing a combination of its growth outlook, size of assets under management (AUM), geographic reach and valuation that is cheaper than comparable company Equitas. .

Equitas stock jumped nearly 23% when it debuted on April 21, a week after its ?? The public offering of 1,525 crore was subscribed more than 17 times. The stock is now listed around 30% above its issue price of ?? 110 per share and is valued around 2.4 times its price / book value (P / Bv).

Domestic brokerage firm Angel Broking Ltd valued Ujjivan’s stock at around 1.8 times its diluted P / Bv of ?? 118 (2.1 times pre-dilution) based on its December quarter earnings.

“The company has a decent return on equity and return on assets of 19.9% ​​and 3.6%, respectively. Although the performance ratios may be compressed a bit after the company is converted to SFB, we expect them to increase afterwards, ”analysts Angel Broking Siddharth Purohit and Chintan Shah said in a statement. customer note.

On the gray market on Monday, Ujjivan’s shares were trading near ?? 38-40 above its award price.

PTI reported on May 1 that Ujjivan proposed to establish 100 bank branches in unbanked locations as mandated by the RBI while issuing guidelines for SFBs.

“We need to have 25% of bank branches in unbanked areas. Currently we do not have one. Due to operational factors, our existing branches are mostly next to PSU (public sector company) bank branches, ”said Ujjivan Managing Director and Managing Director Samit Ghosh, quoted in the PTI report.

The company has until April 2017 to meet all regulatory guidelines and start SFB operations.

Ujjivan, based in Bangalore, is the third microfinance company by AUM. It has 2.77 million active customers across 470 branches in 24 Indian states, according to information available in the Red Herring Prospectus (RHP).

The company received strong demand from all categories of investors as its IPO sold 40.7 times the shares offered. Institutional investors subscribed 33.8 times the shares reserved for them; retail investors and high net worth individuals respectively subscribed 3.9 times and 135.4 times the shares reserved for them.

The issue, which opened on April 28, was reserved exclusively for domestic institutional investors (DII). This was the sale of fresh stocks worth ?? 358.16 crore and an offer to sell up to 24.9 million shares by existing foreign shareholders.

Foreign investors who sold their shares through the IPO included the World Bank branch International Finance Corp., impact investment funds Elevar Equity Llc and India Financial Inclusion Fund, the Dutch development finance institution. FMO, Sarva Capital, Women’s World Banking Capital Partners, Wolfensohn Capital Partners and Mauritius Unitus Corp. They helped Ujjivan reduce his foreign stake to around 45%, down from 77% before his public issue launched.

RBI guidelines do not allow foreign ownership of more than 49% in SFBs. These banks provide basic banking services, take deposits, and lend to underserved sections, including small business units, marginal smallholder farmers, micro and small industries, and unorganized sector entities.

In February, Ujjivan raised new capital to the tune of ?? 292 crore in the so-called pre-IPO round. The company plans to start SFB operations in the first quarter of 2017, the company said.

For the nine months ended December, Ujjivan reported a profit of ?? 122.3 crore on income from ?? 729.6 crores.