Investment Memo: UJJIVAN

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Our Rating: SELL

Mehabe score: 2
G Factor: 2
Piotski Score: 2
The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 2 and Piotski score of 2.

Description

Ujjivan Financial Services was registered with Reserve Bank of India (” the RBI”) as NBFC-MFI under Non-Banking Financial Company Micro Finance Institutions (NBFC-MFIs) directions on September 05, 2013. The Company received approval from the RBI to set up a Small Finance Bank.(Source : 202003-01 Annual Report Page No:78)Site: UJJIVANMain Symbol: UJJIVAN

Price Chart

Market Cap: Rs 2,025 cr Price: 166.0 Trading pe: x
Book-value: 219/share Div yield: 0.00 % Earning yield: 3.33%
Face-value: 10.0/share 52week high: 310.95 52week low: 126.05

Technical Analysis

  • Stock trades at 166.0, below its 50dma 174.77 and below its 200dma 209.83. The stock remains bearish on technicals
  • The 52 week high is at 310.95 and the 52week low is at 126.05

Price Chart

P/E Chart

Sales and Margin

Strengths

– Stock is trading at 0.76 times its book value

Weakness

– has low interest coverage ratio.
– has a low return on equity of 3.33% for last 3 years.

Competition

– The industry trades at a mean P/E of 21.9x. SBI Cards trades at the industry’s max P/E of 98.92x. UJJIVAN trades at a P/E of x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 6.0. UJJIVAN has a G-Factor of 2 and Piotski scoreof 2.
– Average 1 month return for industry is 1.3%. The max 1- month return was given by Cholaman.Inv.&Fn: a return of 11.52 %

Quarterly Results

  • Sales for period ended Jun 2021 is Rs 700.0 cr compared to Rs 784.0 cr for period ended Jun 2020, a fall of 10.7%
  • Operating Profits reported at Rs 137.0 cr for period ended Jun 2021 vis-vis 390.0 for period ended Jun 2020 .
  • Operating Margins contracted -3017.3 bps for period ended Jun 2021 vis-vis Jun 2020 .
  • The EPS for Jun 2021 was Rs -6.8 compared to Rs 5.76 for previous quarter ended Mar 2021 and Rs 5.35 for Jun 2020

Profit & Loss Statement

Profit&Loss Comments

  • Company reported sales of Rs 2983.0 cr for period ended TTM vis-vis sales of Rs 3072.0 cr for the period ended Mar 2021, a fall of 3.0%. The 3 year sales cagr stood at 15.1%.
  • Operating margins shrank to 20.0% for period ended TTM vis-vis 28.0% for period ended Mar 2021, contraction of 800.0 bps.
  • Net Profit reported at Rs -347.0 cr for period ended TTM vis-vis sales of Rs -199.0 cr for the period ended Mar 2021, falling 0%.

Balance Sheet Statement

Cash Flow Statement

Cash Flow comments

  • CashFlow from operating activities: Rs -778.0 cr for period ended Mar 2021 vis-vis Rs -2464.0 cr for period ended Mar 2020

Sales Growth

Profit Growth Statement

Profit Growth Statement

Stock Price CAGR

Return of Equity

General Comments

– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was -7.0% compared to 3.0% over the last 3 Years.
– The stock has given a return of -33% on a 1 Year basis vis-vis a return of -9% over the last 3 Years.
– The compounded sales growth on a TTM bassis is -1% vis-vis a compounded sales growth of 27% over the last 3 Years.
– The compounded profit growth on a TTM basis is -231% vis-vis a compounded profit growth of % over the last 3 Years.

Ratios

Shareholding Pattern

– FII shareholding has risen for the period ended Sep 2021. The Sep 2021 fii holding stood at 26.17% vis-vis 22.94% for Jun 2021
– Public shareholding has remained largely constant. The Sep 2021 public holding stood at 60.09% vis-vis 58.87% for Jun 2021

Conclusion

– Stock is trading at 0.76 times its book value – has low interest coverage ratio.
– has a low return on equity of 3.33% for last 3 years.

  • Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
  • Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 174.77 and is trading at 166.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
  • Thus, overall, we retain a STRONG SELL.

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