Ujjivan Small Finance Bank IPO Review, DRHP, GMP

Ujjivan small finance bank limited ipo

The Ujjivan Small Finance Bank (USFB) was incorporated in the year 2017. The bank is engaged in small finance to under-served and unserved segments in India. They are committed to building financial inclusion in the country. In the year 2005, the bank commenced operations as an NBFC with the mission to provide a full range of financial services to the ‘economically active poor’. The services were for those who were not adequately served by financial institutions. However, today’s topic is entirely based on the upcoming new issue of the Ujjivan Bank. Hence, our primary focus is on the Ujjivan Small Finance Bank IPO Review.

Ujjivan Small Finance Bank IPO Issue Details

  • IPO Opens on – Dec 2, 2019
  • IPO Closes on – Dec 4, 2019
  • Face Value – Rs. 10 Per Equity Share.
  • Issue Price – ₹36 to ₹37 Per Equity Share
  • Issue Type – Book Built Issue IPO.
  • Market Lot – 400 Shares.
  • Minimum Order Quantity – 400 Shares
  • Issue Size – 208,333,333 Eq Shares of ₹10
  • (aggregating up to ₹750.00 Cr)
  • Listing Exchange – BSE, NSE.
  • Draft Prospectus – Click Here

Objects of the Issue

  • To meet the future capital requirement.
  • To carry the expenses.
Ujjivan small finance bank limited

Some Common FAQ to consider in Ujjivan Small Finance Bank IPO Review

Who is the founder of Ujjivan Small Finance Bank?

Mr. Samit Kumar Ghosh founded the Parinaam Foundation, which was a building block of Ujjivan. He is currently the Managing Director and Chief Executive Officer of the company.

Is Ujjivan Small Finance Bank listed?

No this is not yet a listed company in any of the stock exchanges. However, they are coming up with their IPO and they are in the process of getting listed in the NSE and BSE exchange.

In which city Ujjivan Small Finance Bank has commenced its operation?

The company has started its operation in Bengaluru. But now they have shifted their head office to New Delhi.

Is Ujjivan Small Finance Bank safe for FD?

All banks that are governed by the Reserve Bank of India is safe for parking your investments. Ujjivan is also a registered bank and is governed by the rules and regulations of RBI. So it is safe for investing in their fixed deposits.

Company Summary

  • Their portfolio of products and services includes different asset and liability products and also services.
  • The bank offers small size loan products to financially poor women, individual loans to the Micro and Small Enterprises (MSEs).
  • They follow the integrated lending approach where the bank considers technology infrastructure and back-end support functioning before their lending.
  • It has a wide presence across all over 24 states along with union territories in India.
  • As on the report of 30 June 2019, it has 4.72 million customers, 474 Banking Outlets, 387 ATM’s. Besides this, two 24/7 phone banking units (in a place like Bengaluru and Pune) and 50 additionally operated Asset Centers. Customers can use USFB mobile banking application in 5 different languages.
  • Their operations have traditionally been and continue to remain focused on using advanced technology. And they have made a significant investment in automation of their operations.
  • The bank offers its customers with different digital platforms including internet banking, mobile banking, SMS banking, bill payments, bio-metric ATM’s and also Ru-pay Platinum debit cards.
  • They have a tablet-based loan origination system for both of the group and individual loans to bring down loan origination turn-around time for their customers.
  • They have grown in a sustainable manner. Their Gross Advances have grown from Rs. 63,839.77 million as of March 31, 2017, to Rs. 110,485.91 million as of March 31, 2019.
  • Moreover, approval to establish an SFB, following which they incorporated Ujjivan Small Finance Bank Limited as a wholly-owned subsidiary.
  • They provide products as well as services to multiple customer segments with differentiated propositions for their personal and business banking need.

Product Portfolio

So, their product portfolio is as follows:

Asset Products

  • Micro Banking
  • Micro and Small Enterprise (“MSE”) Loans
  • Affordable Housing Loans
  • Loans Against Property
  • Personal Loans
  • Financial Institutions Group (“FIG”) Loans
  • Vehicle Loans
  • Loan Pricing

Liability Products

  • Retail Products
Ujjivan small finance bank ipo review details

Other Products and Services

  • ATM-cum-Debit Cards
  • Aadhaar Enrolment Services
  • Sale of Third Party Insurance Products
  • Branch Network

Among their loan products:

  • Agriculture and allied loans
  • Personal loans
  • Vehicle loans
  • Financial institutions group loans
  • Loans to micro banking customers
  • Affordable housing loans
  • MSE loans

Registered Office

Plot No. 2364/ 8, Khampur Raya Village, Shadi Kampur, Main Patel Road, New Delhi 110 008, India

Ujjivan small finance bank ipo

Company Management

  • Sunil Vinayak Patel Designation: Part-Time Chairman and Independent Director
  • Samit Kumar Ghosh Designation: Managing Director and Chief Executive Officer
  • Jayanta Kumar Basu Designation: Non-Executive Director
  • Vandana Viswanathan Designation: Non-Executive Director
  • Chitra Kartik Alai Designation: Non-Executive Nominee Director
  • Sachin Bansal Designation: Independent Director
  • Luis Miranda Designation: Independent Director

Company Strength

  • Their deep understanding of mass-market serving unserved as well as underserved segments.
  • The bank is a Customer-centric organization along with multiple delivery channels
  • Their Pan-India presence
  • They have their technology-driven operating model with an advanced digital platform
  • Also their robust risk management framework
  • Most strong track record of previous financial performance
  • Efficient Professional management and experienced leadership with a focus on employee welfare.

Company Strategy

So, after the company strength let’s move to strategies.

  • Theirs diversify product offerings to enable many customer relationships
  • The bank continued to focus on technology and data analytics to grow operations
  • Strengthen liability franchise as well as focus on increasing their retail base
  • Expand its distribution network to increase its customer penetration
  • Mainly focus on developing responsible banking behavior for unserved along with underserved segments
  • Diversify their revenue streams

Financial Data Analyzed for Ujjivan Small Finance Bank IPO Review

Above all, this is one of the most important parts of the content, financial data. After that, we will move to the review and analytical section.

financial record

Ujjivan Small Finance Bank IPO Review

First of all, take a look at the above financials. In financial year 19, the company has made a pretty good return. But, the gap in the return between the two financial years is quite big. So, it is advisable to look carefully into it. In addition, let’s check the DRHP (draft red herring prospectus) details. Therefore, the EPS (earnings per share) is at 1.20 (FY19). They have not released their PE ratio yet. However, the company’s RoNW (return on net worth) and NAV/share are 9.49 and 12.64 consequently.

Moreover, you may look at the GMP (grey market premium) and Kosak rate from our site. Ujjivan’s GMP and Kosak rates are 10-12 and 400-450 respectively.

As per our recommendation, Ujjivan Small Finance Bank IPO Review is POSITIVE. Investors can be profitable from a long term perspective.

Conclusion

However, we hope that the IPO will do well in the Indian financial market. The issue looks positive for a listing gain. It also looks good for long-term investment. However, do not forget to follow the QIB investment data before taking any final decision.

Author: Ankita Sarkar

Ankita is a graduate in English language and she has also done her MBA from the Calcutta University. She has a high knack in the stock markets. She is a NISM certified Research Analyst. An experienced stock market content writer Ankita is also trading successfully on her own account.

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