Target: ₹72
CMP: ₹52.48
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 Q1.
On the other hand, the impact of the MFIN guardrail is decelerating, with the three-plus lender portfolio set to become virtually zero over coming quarters. The impact of the recently-reported partial shutdown of restaurants and small businesses too is expected to be limited, assuming that the geo-political situation stabilises 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. The management indicated that the MFI and gold loan portfolios have about 40 per cent customer overlap, which it plans to gradually diversify. On the ‘Universal Bank’ licence, 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 December 2026E TP of ₹72 (implying 1.6x FY28E ABV).