Ujjivan Small Finance Bank perks up as QIP opens

Ujjivan Small Finance Bank has been facing challenges over the last two years, first with the pandemic hitting its asset quality and then the impact of the corner-room battle with a new management and its founder, who had retired.

The lender got listed in late December 2019, just three months before the pandemic disrupted businesses and hitting small lenders hard.

If that was not enough, Ujjivan Small Finance Bank was also affected by the tussle between the new management led by Nitin Chugh and the founder Samit Ghosh. Chugh was previously roped in from HDFC Bank, where he was the head of digital banking. However, he had a short-lived tenure and quit in just about two years.

Ujjivan Small Finance Bank, which is now supposed to get amalgamated with its listed parent Ujjivan Financial Services, had seen a bumper listing with its shares surging around 50% higher than the issue price. But with the pandemic pulling down all stocks it lost over half its value.

While the stock tried to break out again a year after listing and managed to reach the issue price, the bouts of bad news hit the firm again and the share price had halved through 2021. It had been trading flat through the first half of 2022 but has seen a rise over the last few weeks.

On Wednesday, the stock rose nearly 4% and was trading at its 52-week high, even though it is still way below the IPO price.

The immediate impetus is seen coming from the qualified institutional placement that seeks to raise Rs 475 crore to boost its capital base. The issue opened on Monday and with a floor price of Rs 21.93 a share it is seen as a sweet deal for investors looking to bet on the lender.

Earlier, the bank came back into the black for the first quarter ended June 30 with net profit of over Rs 200 crore as it saw major decline in provisioning that had pulled down the finances in the same quarter a year ago.