Why Ujjivan Small Finance Bank Share Price is Rising

Oct 3, 2023

Against the backdrop of a robust economic recovery and the impressive purchasing power exhibited by domestic investors, the stock market has witnessed substantial gains in 2023.

Despite the challenges posed by a strengthening dollar, surging US bond yieldsand elevated crude oil prices, numerous stocks have delivered noteworthy returns over the year.

Notably, June and July emerged as particularly strong months, with the markets reaching multiple record highs.

One company that has excelled amidst this favourable market environment is Ujjivan Small Finance Bank.

The company’s shares have experienced an outstanding surge of over 90% since the beginning of 2023. This remarkable upward momentum has continued, with the company’s shares surging by more than 15% in the past five days.

Here’s why.

#1 Strategic Partnership Impact

The recent uptick in Ujjivan Small Finance Bank shares can be traced back to their announcement on 26 September regarding a strategic partnership with SMC Global Securities.

This partnership focuses on offering online trading services to the bank’s customers, encompassing savings, demat, and trading accounts, thereby enhancing the overall trading experience for Ujjivan SFB’s customers.

Notably, Ujjivan SFB customers can easily open a demat account through the bank’s mobile banking app as a result of this collaboration.

This strategic move not only benefits Ujjivan SFB and its customers but also strengthens and expands SMC Global’s presence and client base throughout India.

Under this arrangement, SMC Global will manage trading and demat accounts for Ujjivan SFB customers, providing a comprehensive range of brokerage services, both full and discount.

This development has contributed to the positive performance of Ujjivan Small Finance Bank shares.

#2 Reverse merger

The reverse merger of Ujjivan Financial Services and Ujjivan Small Finance Bank is a process in which the smaller company, Ujjivan Small Finance Bank, will acquire the larger company, Ujjivan Financial Services, within 3-4 months.

On 8 September 2023, Ujjivan Financial presented its case before the National Company Law Tribunal (NCLT) regarding the amalgamation scheme between Ujjivan FSL and Ujjivan SFB. Subsequently, they obtained the NCLT’s approval for the merger.

This will result in a single entity, Ujjivan Small Finance Bank, which will be listed on the stock exchanges.

The reverse merger ratio is 116:10, which means that for every 10 shares of Ujjivan Financial Services held, shareholders will receive 116 shares of Ujjivan Small Finance Bank.

Anticipated gains from this merger encompass an amplified scale and reach, bolstered financial resilience, and an elevated brand image.

However, it is anticipated that Ujjivan Small Finance Bank (SFB) may apply for a universal banking license after the completion of its reverse merger.

Strong sectoral outlook

According to the National Council of Applied Economic Research (NCAER), the Indian finance sector is expected to grow at a compound annual growth rate (CAGR) of 12.7% from 2022 to 2027.

This will create new opportunities for financial services companies to provide products and services to businesses and consumers.

Further, the government is committed to increasing financial inclusion in the country. This will lead to more people having access to financial services, which will boost the growth of the financial sector.

Additionally, the digital transformation in the finance sector will lead to more efficient and convenient financial services, which will attract new customers and boost the growth of the sector.

How shares of Ujjivan Small Financial Bank have performed recently

Ujjivan Small Finance Bank rose around 154% in the past one year. Over a month, the share price has gone up by 22%.

Ujjivan Small Finance Bank share price touched its 52-week high price of Rs 59.6 on 3 October 2023. Its 52-week low was Rs 21.2 touched on 28 September 2022.

The company is currently trading at a PE (price to earnings) multiple of 8.6 times.

About Ujjivan Small Finance Bank

Ujjivan Small Finance Bank, leading SFB in India, offers banking services like home loan, business, personal & vehicle loans, Online Savings accounts & deposit etc.

Ujjivan Small Finance Bank is among the leading small finance banks in the country. As a mass-market bank, it remains committed to serving the unserved and underserved segments through financial and digital inclusion.

It has a network of over 600 branches and 12,000 ATMs across 24 states and union territories. The bank also offers internet banking, phone banking and mobile banking facilities to customers.

For more details, see the Ujjivan Small Finance Bank company fact sheet and quarterly results. For a sector overview, read our banking sector report.

You can also compare Ujjivan Small Finance Bank with its peers:

Ujjivan Small Finance Bank vs DCB Bank

Ujjivan Small Finance Bank vs Bank of Maharashtra

And to know what’s moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services?here…