Despite some challenges like the dollar getting stronger and US bond yields going up, the stock market in 2023 has been doing really well. A strong economic recovery and robust purchasing power among Indian investors can be the reason behind. Many companies have made a good amount of money for investors.
One standout performer this year is Ujjivan Small Finance Bank, whose shares have surged by over 90% since the year began. The stock continuously going up, and in only five days, it has gone up by over 15%. Let's find out what's making it rise so impressively:
1. Strategic Partnership Impact
Ujjivan Small Finance Bank's recent share price increase can be attributed to its strategic partnership with SMC Global Securities, announced on September 26. This collaboration focuses on providing online trading services, including savings, demat, and trading accounts, to the bank's customers, enhancing their overall trading experience.
Notably, Ujjivan SFB customers can easily open a demat account through the bank's mobile banking app as a result of this partnership. This move benefits both Ujjivan SFB and its customers while expanding SMC Global's presence in India.
2. Reverse Merger
Ujjivan Financial Services and Ujjivan Small Finance Bank are undergoing a reverse merger, where the smaller company, Ujjivan Small Finance Bank, will acquire the larger one. This process is expected to finish in about 3 to 4 months. And, it has received approval from NCLT. The merger will result in a single entity, Ujjivan Small Finance Bank, listed on stock exchanges.
Shareholders of Ujjivan Financial Services will receive 116 shares of Ujjivan Small Finance Bank for every 10 shares held. This merger promises amplified scale, financial resilience, and a stronger brand image. Moreover, there's anticipation that Ujjivan Small Finance Bank may apply for a universal banking license after the merger.
3. Strong Sectoral Outlook
The Indian finance sector is poised for growth, with a projected compound annual growth rate (CAGR) of 12.7% from 2022 to 2027, according to the National Council of Applied Economic Research (NCAER). This creates opportunities for financial services companies, and the government's commitment to financial inclusion will further expand the sector. Digital transformation in finance will also attract new customers and enhance sector growth.
Recent Performance
Ujjivan Small Finance Bank's shares have risen approximately 154% in the past year and 22% in the last month. The share price recently reached its 52-week high of Rs 59.6 on October 3, 2023, compared to its 52-week low of Rs 21.2 on September 28, 2022. The company currently trades at a PE (price to earnings) multiple of 8.6 times.
About Ujjivan Small Finance Bank
Ujjivan Small Finance Bank is a major bank in India. It provides lots of banking services like home loans, business loans, personal loans, and more. With a vast network of branches and ATMs across the country, the bank focuses on financial and digital inclusion.
As the bank continues its impressive performance, investors are eagerly watching its future developments and growth prospects.