Shares of Ujjivan Small Finance Bank fell nearly 6 per cent as its net profit slumped 66 per cent to ₹103 crore during June 2025 quarter as against ₹301 crore in the same quarter of the previous fiscal year.
The total income rose to ₹1,868 crore during the quarter under review compared to ₹1,774 crore in Q1FY25.
The gross non-performing assets (NPAs) remained flat at 2.52 per cent of gross advances. The net NPAs rose to 0.7 per cent compared to 0.4 per cent in the year-ago period.
Continued elevated stress and de-growth in the MFI portfolio led to lower margins and higher provisioning. However, brokerages have maintained positive stances on the stock and expect FY26 asset quality improvement with MFI recovery.
Emkay believes that Ujjivan is well-positioned to benefit from a recovery in the microfinance (MFI) segment, which could drive a significant improvement in its return on assets (RoA), rising from 1.4 per cent in FY26E to 2.2 per cent by FY28E. Furthermore, the bank is seen as a strong contender for a Universal Banking license, a development that would be positive for both its capital position and profitability. In light of these factors, Emkay maintained buy rating on Ujjivan at an unchanged target price of ₹60.
BoB Capital Markets observed that the asset quality performance remains better vs peers with normalisation in MFI CE expected from Q3FY26. The brokerage maintained buy at an unchanged target price of ₹59.
Centrum also retained buy at revised target price of ₹53 per share.
Yes Securities said that a significant RoE turnaround is likely from H2 FY26 led by reduction in credit cost, return of portfolio growth in micro banking and gradual improvement in profitability of secured products with rising scale. The brokerage expects the bank to deliver 15 per cent RoE in FY27. It has maintained an add call at a target price of ₹55.
HDFC Securities noted that the delinquency trends of the MFI book (excluding Karnataka and Tamil Nadu) are showcasing early signs of moderation while remaining elevated. The brokerage retained add rating at ₹45 as target price.
The stock ended at ₹43.31 on the BSE, down 5.91 per cent after hitting an intraday low of ₹42.93.
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Published on July 25, 2025