Metrics raised 1
- FY27 ROA guidance raised to 1.8%-2.0% (prior level not stated in summary)
Metrics cut 2
- FY27 credit cost guidance cut/revised to 0.9%-1.0% of average total assets (basis shifted from average gross loan book; prior numeric level not stated)
- FY27 opex guidance lowered to ~6.4% of average assets (lower than earlier planned)
Event Participants
Executives
10
Ashish Goel, Brajesh Cherian, Carol Furtado, Gaurav Sah, Hitendra Jha, Martin P S, Sadananda Balakrishna Kamath, Siddharth Bharadwaj, Umesh Arora, Vibhas Chandra
Analysts
9
Abhishek Murarka, Ashlesh Sonje, Kaushik Agarwal, Param Subramanian, Pritesh Bumb, Rajiv Mehta, Renish Bhuva, Sagar Shah, Shreepal Doshi
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Total Deposits | ₹48,129 crores | Up 25% YoY — highest growth in last two years; June rate hikes on key buckets executed in tight liquidity scenario |
| CASA Deposits | ₹12,930 crores | Up 37.8% YoY; top 8/30 markets delivering ~75% YoY CASA growth |
| Gross Loan Book | ₹42,903 crores | Up 28.9% YoY and 5.5% QoQ; supports confidence in FY27 planned asset growth of 25% |
| Secured Loan Book | ₹21,638 crores | Up 42.7% YoY and 7.8% QoQ; 50.4% of total loan book now secured |
| Disbursements | ₹9,245 crores | Up 41.4% YoY |
| Micro Banking Book | ₹21,371 crores | Up 16.8% YoY; 1.72 lakh new customers added in Q1 — first borrower base growth after seven quarters of degrowth |
| Affordable Housing + Micro Mortgages | ₹11,210 crores | Up 40.8% YoY; GNPA stable at 1.2% and 0.6% respectively |
| MSME Book | ₹3,470 crores | Up 54% YoY; working capital and supply chain finance ~28% of book; PAR down 13 bps; new book GNPA stable at 0.5% |
| Gold Loan Book | ₹1,020 crores | Up 248.6% YoY; disbursements up 183.9% YoY to ₹467 crores; origination LTV 75%, book LTV ~56% |
| Vehicle Loan Book | ₹1,036 crores | Up 85.1% YoY; two-wheeler focus with mid-premium/EV mix; GNPA steady at 1.7% |
| GNPA | 2.17% | Down 10 bps QoQ |
| Provision Coverage Ratio | 85% | Strengthened further; MFI PCR ~95% |
| Collection Efficiency (Bucket X) | 99.68% | Healthy portfolio performance; July trends broadly similar |
| Credit Cost | ₹127 crores (0.9% of avg total assets) | FY27 guidance revised to 0.9%-1.0% of average total assets (shifted from average gross loan book basis) |
| Write-offs | ₹72 crores | Q1 FY27 |
| Net Interest Income | ₹1,186 crores | Supported by stable NIM |
| Profit After Tax | ₹317 crores | ROA 2.2%; ROE 18.2% |
| NIM | 8.5% | Stable; management expects sustainability given yield mix and funding levers |
| Cost of Funds | 6.86% | Continued downward trajectory; marginal increase expected over coming quarters |
| LCR | ~132% | Sound liquidity health |
Geographic & Segment Commentary
Micro Banking: Book at ₹21,371 crores (up 16.8% YoY) with disbursements of ₹4,581 crores (up 16.4% YoY). Bucket X collection efficiency at 99.7% with all states stabilized; four-plus lender exposure below 1.5%. Kerala deliberately kept at low growth; branch expansion concentrated in UP, Rajasthan and Bihar where portfolio behavior has been stronger.
Affordable Housing & Micro Mortgages: Combined book at ₹11,210 crores (up 40.8% YoY), distributed through 581 branches (affordable housing) and 323 branches (micro mortgages). GNPA stable at 1.2% and 0.6% respectively; micro mortgage PAR up marginally to
1.5% as the three-year-old book seasons. Monthly disbursement capacity of ₹350-375 crores for affordable housing and ~₹100 crores for micro mortgages, with incremental mix shifting toward higher-yielding micro mortgages (19.5% yield vs ~12.5% for affordable housing).MSME: Book grew 54% YoY to ₹3,470 crores. Ticket sizes deliberately increased — LAP from ₹58-60 lakhs to ₹80-90 lakhs and working capital from ₹70-80 lakhs to ₹1.1-1.2 crores — accepting lower yields (~10.5% vs 11-11.5% earlier) for lower opex, higher ROE and non-fund opportunities such as bank guarantees.
Gold Loans: Book grew 248.6% YoY to ₹1,020 crores across 455 sourcing branches (106 added in Q1). Monthly run-rate of ₹160-175 crores; ~250 more branches to be activated this year, with headroom in East, Northeast and North India where the market is less developed. New-to-bank customer share rose to 40% on new branch activation and microfinance customer demand.
Vehicle Loans: Book at ₹1,036 crores (up 85.1% YoY) across 337 branches; focus on enhancing mid-premium and EV two-wheeler mix. Pre-owned cars piloted in Karnataka as a new growth engine; HCV/LCV only after FY27.
Emerging Businesses (Gold, Vehicle, Agri): Contributed 7% of gross loan book and 9% of Q1 disbursements.
Company-Specific & Strategic Commentary
Liability Franchise Build-out: Ivory HNI program gaining strong momentum; insurance cross-sell penetration improved; mutual fund distribution now accessible via mobile and Internet banking with growing adoption; co-branded credit card in testing phase. FCNR deposits mobilized ₹60+ crores in Q1 using newly created forex capacities with attractive rates.
Branch Expansion: 38 new branches operationalized in Q1 taking total to 814; 144 planned for FY27 with 106 to open over remaining quarters, primarily supporting liability growth.
New Asset Product Launches: Unsecured Fast Track loan (pure digital, leveraging account aggregators and bureau data) completed pilot and ready for scale-up; pre-owned cars piloted in Karnataka; lending to mid-corporates commenced with Q1 disbursements; purchase invoice discounting added to MSME suite.
Capacity Building Investments: ~₹250 crores earmarked for branch opening, branding, tech and analytics capabilities; spend delayed from early Q1 to June onwards, resulting in full-year opex guidance of ~6.4% of average assets — lower than earlier planned.
Digital & Analytics: Multiple digitization and analytics-led interventions underway to bolster the liability franchise; account aggregator utilization embedded in new digital lending products.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Asset Growth | ~25% for FY27 | Strong Q1 performance across asset products reinforces confidence; secured mix to reach 56% by March 2027 (reaffirmed) |
| ROA | 1.8%-2.0% for FY27 (raised) | Driven by lower opex (~6.4% of avg assets) and improved credit cost outlook; NIM expected stable at ~8.5% |
| Credit Cost | 0.9%-1.0% of average total assets for FY27 (revised) | Basis changed from average gross loan book to average balance sheet; supported by steady 99.7% bucket X CE, MFI slippages at 1.72% annualized (down from 2.68% in Q4) |
| Opex | ~6.4% of average assets for FY27 | Lower than earlier planned; ~₹250 crores capacity-building spend to phase in over remaining quarters |
| CASA Ratio | ~30% by end FY27 | Management committed, possibly slight over-delivery; CASA growth of ~35%+ expected to sustain |
| Gold Loan Branches | ~575 active branches by March 2027 | From ~440 currently; exit monthly disbursement of ₹230-250 crores |
| Bulk Deposit Ratio | ~30% | Key guiding factor maintained through the year |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical uncertainty | West Asia conflict, which began in February, continued through the quarter; despite ceasefire discussions, the situation remains fluid and creates global market uncertainty. |
| Weather / El Nino | Strengthening El Nino poses a risk to kharif sowing; any delay could impact H2 FY27 economic activity and rural portfolio performance. Management flagged this as a key monitorable. |
| Deposit competition & margin pressure | Tight systemic liquidity, competitive intensity in CASA mobilization, and pricing pressures across key asset products could pressure NIM. Management expects only marginal cost-of-fund increases, baked into guidance; IBPC, refinance and securitization levers available. |
| Non-MFI yield sustainability | Competition in affordable housing and financing segments could constrain yields over the medium term. Management asserts geography and ticket-size mix protect yields, but analysts flagged ROA sustainability as the book structurally shifts away from MFI. |
| Micro mortgage portfolio seasoning | PAR increased from 1.2% to ~1.5% and GNPA from 0.47% to ~0.55% as the three-year-old book matures; 18/24 MOB vintages remain below 2.5%, but normalization is expected to continue. |
Q&A Highlights
Asset Yields & Medium-Term ROA Sustainability
- Question: With affordable housing yields hovering at 12.2-12.3% for several quarters, can yields be sustained and can 2% ROA be maintained as the bank structurally shifts from MFI? (Renish Bhuva)
- Answer: Affordable housing yields are ~12.5%, protected by semi-urban/urban geographies (minimal metro presence) and ₹16-20 lakh ticket sizes. Micro mortgages (₹1,800 crores book) yield ~19.5% with 70% semi-urban mix and ₹7-8 lakh average tickets, providing a healthier incremental mix. (Ashish Goel)
Gold Loan Growth & Branch Expansion
- Question: What drove the sharp rise in new-to-bank customers to 40% in gold loans, and what is the book trajectory? (Renish Bhuva; Sagar Shah)
- Answer: 100+ branches activated for gold loans in Q1 drove new customer acquisition, alongside increased demand from microfinance customers. Monthly run-rate is ₹160-175 crores; active branches to rise from ~440 to ~575 by year-end with exit disbursements of ₹230-250 crores/month. ~250 more branches to be activated this year; loan officer productivity reaches ₹25-30 lakhs within a year; significant opportunity in East, Northeast and North India. (Vibhas Chandra, Ashish Goel)
Cost of Funds Trajectory & Rate Hikes
- Question: Given tight liquidity and June rate hikes, will cost of funds move up further, and has repricing benefit been fully realized? (Shreepal Doshi; Kaushik Agarwal)
- Answer: Deposit growth is aligned with asset growth; IBPC, refinance and securitization options available. No immediate further rate hikes expected; marginal increase is already baked into the 1.8-2.0% ROA guidance. Repricing benefits are almost fully realized — cost of funds will stay at current levels or slightly elevated. (Brajesh Cherian)
Capacity Building Spend & NIM Outlook
- Question: What is the capacity-building investment, and does the ROA guidance assume NIM compression? (Rajiv Mehta; Abhishek Murarka)
- Answer: ~₹250 crores planned for branch opening, branding, tech and analytics; minimal spend in Q1 with spending starting in June, so full-year opex will be ~6.4% of average assets. Q1 opex reflects the true underlying run rate with the extraordinary spend to show in coming quarters. NIM expected to sustain given strong MFI yields, higher-yielding segments (gold, two-wheeler, used car, micro mortgage), and funding levers. (Sadananda Kamath)
Liability Franchise Strategy & CASA Growth
- Question: Can CASA growth continue, and is the ~30% CASA ratio target on track? (Ashlesh Sonje; Rajiv Mehta; Pritesh Bumb)
- Answer: Confident of maintaining current CASA growth; CASA ratio commitment on track with possible slight over-delivery. 144 branches planned this year (38 opened); top 8/30 markets delivering ~75% YoY CASA growth; segmental focus on HNI (Ivory), NRI, TASC and corporate salary. Retail TD now cheaper than bulk TD with good momentum; bulk deposit ratio guided at ~30%. FCNR mobilized ₹60+ crores in Q1. All liability customers are savings-account backed — no stand-alone TD customers onboarded. (Hitendra Jha, Brajesh Cherian)
Credit Cost Guidance Revision & MFI Health
- Question: What gives confidence to cut credit cost guidance, and are there early warning signs from weather? (Kaushik Agarwal; Pritesh Bumb; Sagar Shah)
- Answer: Bucket X collection efficiency steady at 99.7% in Q1 and July; all states stabilized; four-plus lender exposure below 1.5%. MFI slippages fell to 1.72% annualized in Q1 from 2.68% in Q4; MFI credit cost was ~1.9% on GLP in Q1; MFI provisions held at ₹657 crores with PCR ~95%. Guidance revision driven by opex first, credit cost second. (Ashish Goel)
MSME Ticket Size Migration & Yield Trade-off
- Question: Why is MSME ticket size increasing, and where does the yield settle? (Abhishek Murarka)
- Answer: Conscious strategy — LAP tickets moved from ₹58-60 lakhs to ₹80-90 lakhs; working capital from ₹70-80 lakhs to ₹1.1-1.2 crores. Yields decline from ~11-11.5% to ~10.5%, but lower opex and risk costs compensate for the yield trade-off; higher ROE from leveraged products and non-fund opportunities (bank guarantees) open up. Strategy will hold in current band for the year. (Ashish Goel)
Micro Mortgage PAR & Housing Mix
- Question: Micro mortgage PAR is climbing — where does it settle, and how will the housing mix evolve? (Pritesh Bumb; Abhishek Murarka)
- Answer: PAR moved from 1.2% to ~1.5% and GNPA from 0.47% to ~0.55%, but 18/24 MOB vintages remain below 2.5%; 99.7-99.75% bucket X CE sustained for 24 months. Affordable housing capacity of ₹350-375 crores/month built; micro mortgage disbursements at ~₹100 crores/month exiting March at ₹140-150 crores — incremental mix shifting toward micro mortgages. (Ashish Goel)
Key Takeaway
Ujjivan SFB delivered a strong Q1 FY27 with PAT of ₹317 crores (ROA 2.2%, ROE 18.2%), underpinned by 28.9% YoY gross loan growth to ₹42,903 crores and the highest deposit growth in two years at 25% YoY to ₹48,129 crores. The secured book expanded 42.7% YoY to ₹21,638 crores (50.4% of loans), led by gold loans (+248.6% to ₹1,020 crores), vehicle loans (+85.1%), MSME (+54%) and affordable housing/micro mortgages (+40.8%). Asset quality improved — GNPA down 10 bps to 2.17%, PCR at 85%, MFI slippages halved to 1.72% annualized — enabling management to raise FY27 ROA guidance to 1.8-2.0%, revise credit cost guidance to 0.9-1.0% of average total assets, and guide opex to ~6.4% of average assets, with NIM stable at 8.5%. Strategic focus remains on liability franchise depth (Ivory HNI, FCNR, segmental CASA push), new product engines (digital Fast Track loans, pre-owned cars, mid-corporate lending), and 144 branch additions in FY27. Key watch items: El Nino impact on kharif sowing and H2 rural activity, deposit competition and marginal cost-of-fund pressure, and micro mortgage PAR normalization as the book matures.