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Ujjivan stock a little overvalued, should settle at Rs 52-55: Siddharth Purohit, SMC Global

The business model of the small finance banks is evolving and is fairly strong.

ET Now|
Dec 12, 2019, 03.57 PM IST
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ETMarkets.com
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Now onwards, one should watch how Ujjivan SFB evolves in terms of expanding to other areas of business, says Siddharth Purohit, Equity research analyst, SMC Global Securities. Excerpts from an interview with ETNOW.

Given how massively the Ujjivan SFB issue was oversubscribed, is the kind of premium that it is listed on a surprise?
In fact, we have given up subscribe rating to the issue and we were expecting a very good listing, which happened. Certainly the business model of the SFBs is evolving and is fairly strong. Naturally there would have been a strong demand which apparently happened during the IPO. But now onwards, one should watch how they evolve in terms of expanding to other areas of business as banks just do not rely on microfinance alone and as the management was trying to say that they have been putting in a lot of infrastructure and trying to expand in other areas of business, that will be the key monitorable going ahead.

Naturally, since there was a huge subscription, the listing was very premium, but I felt the stock got a little overvalued. That is why because some amount of profit booking was seen but it is not a stock that one should exit. One would rather recommend a lower level but obviously at a fair valuation, which comes close to Rs 52-55. where the stock should settle going ahead.

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