ICICI Securities has reiterated a BUY rating on Ujjivan Small Finance Bank, forecasting a compelling 25% upside from current levels. The research house touts Ujjivan’s newly unveiled FY30 blueprint, which balances aggressive growth targets with risk moderation and structural reforms. At a current price of Rs 44 and a target of Rs 55, the stock sits at a pivotal juncture as management pursues scale, asset quality, and operational leverage. Investors should monitor financial metrics and strategic milestones as Ujjivan pivots toward a diversified, tech-driven franchise for India’s emerging middle class.

ICICI’s FY30 Vision: Aggressive Targets Underpinned by Innovation

Transformational roadmap sets ambitious benchmarks. Ujjivan is eyeing a loan book expansion to Rs 1 trillion by FY30—up from Rs 333 billion currently—plotting a compound annual growth of over 25%. Notably, the bank is prioritizing a 65-70% share for secured assets, compared to 46% now, while projecting steady advances in CASA ratio to 35% and cost-to-income ratio to 55%. These targets are paired with aspirations for RoA of 1.8–2% and RoE of 16–18%, positioning Ujjivan as a formidable challenger among mid-sized domestic banks.

Market Performance and Key Levels

Current price: Rs 44, Target price: Rs 55. ICICI’s recommendation rests on attractive valuations, with the stock trading at 12.2x FY26E earnings and 1.3x FY26E book. After a volatile year, the bank’s 52-week price range spans Rs 31 to Rs 52; Rs 44 marks a support level and Rs 55 serves as the medium-term technical target for momentum traders and long-term investors alike.

From NBFC Roots to Banking Scale

Execution prowess drives sector-leading growth. Over the last decade, Ujjivan migrated from NBFC to SFB status, scaling its loan portfolio dramatically and building a resilient liability base—CASA ratio sits at nearly 25% as of June ’25. Transition challenges aside, management leveraged calibrated execution, managing credit costs (~150 bps ex-Covid) and balancing asset pivot away from unsecured microfinance. Sustainable diversification is at the core of future plans, minimizing exposure to cyclical risks in favor of robust, secured retail lending.

Operational Priorities: Diversification and Branch Productivity

Secured product suite to anchor next growth phase. The rapid shift to secured products—affordable housing and micro LAP marked for ~30% growth—will bolster asset quality and earnings consistency. Branch expansion will be swift: 400 new outlets are planned by FY30 to reach 1,150 total branches, with liability and loan figures per branch expected to double. Improving productivity and deepening product penetration within existing districts are key levers.

Margins, Asset Quality, and Cost Dynamics

Margin moderation is offset by falling credit costs. Ujjivan’s shift to a secured asset mix means net interest margin will descend from 7.7% (Q1FY26) to a steady 6–7% by FY30. While this contraction may challenge top-line growth, it is compensated by an anticipated decline in steady-state credit costs to 100–150 bps, a sharp drop from current levels. The cost-to-income ratio will decline as non-interest income grows through distribution of third-party financial products and deeper insurance, mutual fund, and credit card penetration.

Balance Sheet Fortitude and Universal Banking License Aspirations

Strong capitalization creates a foundation for expansion. Ujjivan’s tier-1 capital stands robust at 21.2%, CRAR at 22.8%. Management foresees a Rs 20 billion equity fundraise in the next 18–24 months to support balance sheet growth and transition toward a universal banking license—a potential game-changer. If granted by RBI by year-end, the license will reduce regulatory capital requirements, facilitate risk diversification, and potentially lower funding costs as Ujjivan sheds the ‘small finance’ tag.

Projections: Financial Summary for Ujjivan

The following table presents vital forward metrics for Ujjivan, illustrating its trajectory over the next three years:

ESG and Risk Factors

Corporate responsibility remains integral to bank strategy. Ujjivan maintains strong ESG disclosures with stable scores across environment, social, and governance pillars. The principal risks for shareholders include potential spikes in credit costs—particularly from unsecured assets—and risks of slower AUM growth resulting from moderation in unsecured lending.

Investment Decision: What Should Investors Expect?

ICICI sets a bullish medium-term tone. Ujjivan remains the research house’s top pick in the small bank segment, anchored on disciplined execution and robust forward-looking fundamentals. With clear strategic and regulatory catalysts ahead, investors ought to follow whether Ujjivan secures universal banking status, as this would likely trigger more favorable valuations. Until then, Rs 44 remains a durable floor and Rs 55 is the actionable target for the ambitious portfolio builder, well-aligned with India’s evolving banking landscape.