Is Ujjivan Bank IPO a good bet

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Ujjivan Bank

Ujjivan Small Finance Bank is coming with Initial Public Offer (IPO) to raise a capital of ₹ 750 Crores from equity market in aim to expand their business operation. 10% of the issue is reserved for existing shareholders of Ujjivan Financial Services Limited . The price band has fixed at ₹ 36-37 each share . It has offered a discount of ₹ 2 each share to existing shareholders of Ujjivan Financial Services Limited. The issue is going to open from 2 December, 2019 to 4 December, 2019.

Ujjivan Small Finance Limited is a subsidiary company of Ujjivan Financial Services Limited. It has started its business operation on 1 February, 2019 as a subsidiary company of Ujjivan Financial Services Limited. It was promoted by Ujjivan Financial Services Limited to provide a full range of financial services to economically active poor. Company has strong presence in small and micro finance segment . Ujjivan Small Finance Limited also offers variety of financial services like Saving Account, Fixed Deposits, recurring deposits, current accounts, home loan, insurance services and business loan .

Strength : Bank has business operation in 24 Indian states with a network of 385 ATMs . It has a customer base of 49 Lakhs with 43 lakhs borrowers and covers 233 districts. It has also 16,347 employees as per data provided by bank . Bank is offering bio-metric based ATM services and accepting E-KYC for quick account opening. Cost to income ratio of bank is continuously decreasing and has comes down to 65% from 95% in the year 2017. Net Interest margin has increased as compared to previous financials. The financials of bank has also shown positive trend year to year.

Challenges : Bank is facing tough competition from AU Small Finance Bank and Bandhan Bank in small and micro financing segment. Both of the banks have strong presence in small and micro financing segment and are aggressively working on to gain their market share.

Opportunities: Banking sector is one of the fastest growing sector of Indian economy . Government is also encouraging financial institutions and banks to offer loans to small and cottage industries . A major portion of rural India is still untouched with banking services and in recent years banking sector has witnessed a huge demand in micro financing .

AU Small Finance Bank and Bandhan Bank IPO in the same segment has witnessed a strong listing gain in last couple of years . So investors are expecting the same listing gain from Ujjivan Small Finance Bank shares. Banking sector stocks has shown bullish trend in last trading sessions and it can also lead a listing gain.

IPO Details :

  • IPO open on : 2 February, 2019
  • IPO Closed on : 4 February, 2019
  • Face Value of Shares : ₹ 10
  • Discount : ₹ 2 (For existing shareholders)
  • Price bid : ₹ 36-37
  • Lot Size : 400 shares
  • Listing : Bombay Stock Exchange (BSE) and National Stock Exchange (NSE)

Disclaimer : Views expressed are informative in nature and does not claim for accuracy . also does not endorse any financial decision. Investment is subject to market risk so kindly consult with your financial adviser before taking any investment decision .

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