Q4 results impact on share price of Ujjivan Small Finance Bank – DETAILS from Nomura

A day after fourth-quarter results were released, Nomura being sceptical about Ujjivan Small Finance Bank maintains a Neutral Stance while setting a target of Rs 240 per share. The stock at present around 11:30 am is down over four per cent at Rs 209 per share on the BSE. 

The brokerage firm says, quarter four operationally weak with a Rs 75 crore interest reversal impacting PPoP (pre-provision operating profit). The apex court had ordered the banks and NBFCs to reverse the interest-on-interest while hearing the multiple moratorium pleas earlier in March. 

The company’s net profit jumped by 87 per cent to Rs 136.49 crore in the March-ended quarter of the financial year 2020-2021 as against Rs 73.15 crore during the same quarter in FY20. 

Nomura in its commentary says the private lender has barely managed to remain profitable for FY21 and overall stress levels remain high. It further added, the bank has negatively surprised by large NPAs (non-performing assets) across all segments.  

The bank reported other income at Rs 117 crore as against Rs 72 crore helped the rise in net profit. It wrote back Rs 25 crore of provisions during Q4 while provided Rs 97 crore in the year-ago period. 

The total provision against bad loans stood at Rs 955 crore at the end of March covering 6.3 per cent of gross advances, which grew 7 per cent year-on-year to Rs 15,140 crore, the bank said. 

The brokerage firm has mentioned that the collection efficiency declined by 300-600 bps of the bank across segments in April 2021 

Ujjivan opened weak today at Rs 214.9 per share as compared to Rs 217 per share on Tuesday’s close. The stock touched Rs 206 per share as its intraday low so far.