Thursday, April 28, 2016

#Ujjivan Financial Services #IPO valuation looks reasonable

Many brokerages feel the IPO valuation of micro finance lender Ujjivan Financial Services (UFSL) looks reasonable and the company has potential to deliver strong growth and return on assets, even after its conversion into small finance bank.

But according to Samit Ghosh, MD and CEO of Ujjivan post its conversion into small finance bank the ROI and ROA of the company will come down and stabilise at a rate that any other normal banking company operates.The Company proposes to utilise the net proceeds of the fresh issue for augmenting its capital base.

At the upper band of the price band at Rs 210, UFSL will trade at 1.6 times the projected book value of nearly Rs 130 (post-issue) which we believe is fairly priced.The IPO which opens on Thursday closes on May 2nd with a price band of Rs 207-Rs 210 per equity share of face value of Rs 10 each.