Ujjivan SFB shares: 5-year roadmap sends stock soaring; 58% upside likely, says Antique

Antique Stock Broking has retained its 'Buy' rating on Ujjivan Small Finance Bank (Ujjivan SFB) following the lender’s recent analyst meet, where management outlined a five-year strategic roadmap aimed at building a more diversified and secured portfolio while sustaining growth. Antique sees Ujjivan SFB at Rs 73 apiece, valuing the stock at 1.7 times its estimated first-half FY28 book value. 

At day's high of Rs 46.34, Ujjivan SFB was up 4.86 per cent over its previous closing. The stock has climbed nearly 9 per cent in two straight sessions, which includes 3.68 per cent gain on Monday. Antique's target price suggests 58 per cent potential upside over this price.

Ujjivan SFB is targeting over 25 per cent CAGR in its loan book between FY25 and FY30, aiming to scale up assets to Rs 1 lakh crore by FY30 from Rs 33,300 crore in June 2025. The bank expects a sharp tilt towards secured lending, with its share projected to rise from the current 46 per cent to 65–70 per cent by FY30, led by housing finance, MSME, corporate loans, vehicle finance and gold loans. The structural shift will likely compress net interest margins (NIMs) to 6–7 per cent by FY30 from current levels, but Antique noted that improved asset quality and lower credit costs of 1–1.5 per cent over FY30 should offset the margin pressure.

The bank believes slippages in its microfinance portfolio have peaked, with July and August showing better disbursement and collection efficiency. Collection efficiency in the MFI segment is expected to normalize to about 99.5 per cent as tighter underwriting norms take hold. Antique sees this as a key positive, with credit costs for FY26 still expected to be elevated at 2.3–2.4 per cent before normalizing thereafter.

On costs, Ujjivan SFB aims to bring down its cost-to-assets ratio from 6 per cent to 5 per cent over the next five years, helping drive guided return on assets (RoA) of 1.8–2 per cent and return on equity (RoE) of 16–18 per cent by FY30. To fund growth, the bank is looking to triple its liability base to Rs 1.2 lakh crore by FY30 and lift its CASA ratio from 24 per cent to around 35 per cent, aided by higher current account mobilisation, branch expansion and productivity gains. Ujjivan plans to add 400 new branches, taking the total to 1,150 by FY30.

The bank has applied for a universal banking license and expects clarity from the RBI by December 2025. It also plans to raise about Rs 2,000 crore over the next 18–24 months to support growth, though its current capital adequacy ratio of 23 per cent remains comfortable.

Antique highlighted Ujjivan SFB’s steady shift to a secured portfolio and improving MFI trends as strong positives that support portfolio diversification and sustainable growth. However, it flagged execution risks, given that many of the bank’s focus areas are new business segments. At current valuations of 1.1 times and 0.9x FY27 and FY28 book value, the brokerage believes the stock remains attractive and sees scope for rerating as asset quality normalizes and returns improve.

Meanwhile, ICICI Securities said: "Building upon its strong foundation it laid between FY17-25, it unveiled a strategic roadmap to achieve RoA of 1.8-2 per cent with RoE of 16-18 per cent by FY30 with a focus on loan diversification, strengthening liability franchise and improving branch productivity. Retain BUY with an unchanged target price of Rs 55, valuing the stock at 1.5x on Sep’26E BVPS," it said.