How Ujjivan Financial investors' wealth nearly doubled in a month

Broader equity markets may have continued their steady upsurge on the bourses, with benchmark Sensex edging past the psychological 27,000-mark. But what is astonishing to look at is the superlative performance of the recently-listed microfinance company, Ujjivan Financial Services.

The Bengaluru-based company made its debut on the bourses on 10 May. In less than a month’s time, the stock has witnessed frenzied buying, soaring a whopping 83 percent to touch a high of Rs 400 in today’s intra-day trade as against its issue price of Rs 210.

Effectively, the rapid appreciation in share price resulted in investor wealth surging to Rs 4,352 crore today from Rs 2,738 crore based on the listing day’s closing price.

Finally, the stock today closed 15 percent higher at Rs 382.95 on BSE over its previous close.

So, what has been driving investor interest into the company. Besides the overall broad market sentiment seen in recent weeks, the company announcing its earnings numbers posted a robust 134 percent jump in its net profit at Rs 177 crore for FY16. The company had reported a net profit of Rs 77 crore in FY15.

Total income of the company rose 68 percent to Rs 1,028 crore in the year ending March 2016, while its net interest income increased 82 percent to Rs 510 crore in FY16 from Rs 281 crore in FY15.

Also, Ujjivan’s net interest margin, a profitability gauge for lenders, improved 70 basis points to 12.3 per cent in FY16 compared to 11.6 per cent in FY15, NDTV report said.

The company also has the license to start a small finance bank, which it hopes to start from 1 April, 2017. Market analysts expect the move will drive next phase of growth for this microfinance company.

It seems markets have been extremely bullish in this segment, as another mircofinance company Equitas Holdings, too, has witnessed strong bout of investor buying interest.

Since making its debut on 21 April, Equitas stock has flared up over 70 percent from its issue price of Rs 110.

Maintaining its upward trend, Equitas shares today ended 4.1 percent higher on BSE at Rs 173.60.