Ujjivan Small Finance Bank Limited — Investor Meet, 27-01-2025: Analysts/Institutional Investor Meet/Con. Call Updates

**Financial Performance**: Ujjivan Small Finance Bank reported a PAT of ₹109 crore for the quarter, resulting in an adjusted ROA and ROE of 1.1% and 15.2%, respectively. The NIM stood at 8.6%, slightly down from previous quarters due to the rising share of lower-yielding secured assets. Overall, the secured loan book accounted for 39% of the total loan portfolio, growing significantly by 52% YoY, bolstered by strong performances in affordable housing and MSME segments.

**Future Outlook and Growth Drivers**: Management is optimistic, forecasting a robust growth trajectory in the secured loan segment, which is expected to reach 40-42% of the total loan book by FY25-end. Key growth opportunities include micro-mortgages and vehicle finance, with the former seeing disbursements exceeding ₹300 crore recently. The bank anticipates improved collection efficiencies, particularly as delinquency issues from previous quarters stabilize.

**Order Book and Operational Updates**: The bank's total deposits surged to ₹34,494 crore, marking a 16% YoY increase, with CASA deposits also seeing notable growth. The microfinance segment, while facing challenges, is expected to benefit from enhanced collection strategies, including increased staffing.

**Analyst Q&A Insights**: Questions focused on credit costs and asset quality, with management maintaining guidance for credit costs between 2.3% and 2.5%. Analysts expressed concern over potential slippage as customers transition to the three-lender cap in April, prompting management to emphasize proactive engagement with customers to mitigate risks associated with this transition.

**Market or Regulatory Updates**: The transition to universal banking remains a key focus, providing potential for future growth. Competitive pressures in the lending landscape are acknowledged, with management adjusting interest rates on loans to attract quality borrowers amidst regulatory changes.

**Strategic Focus Areas**: The bank's strategy centers around solidifying its position in the secured lending space while maintaining its microfinance operations. Management highlighted effective risk management practices and customer retention strategies as crucial for future success.

**Investor Insight**: The strong turnaround in performance indicators and strategic initiatives suggest an optimistic outlook. Given the focus on improving asset quality and securing growth in diversified segments, a 'buy' stance could be warranted, considering potential growth trajectories and risk management efforts.