Ujjivan Small Finance Bank's profit after tax fell by 24%, amounting to Rs 2.3 billion, primarily due to lower other income and increased provisions in the microfinance sector.

The bank's asset under management growth has slowed to 14% year-on-year and 1% quarter-on-quarter, with net credit growth at 20% year-on-year, as it adopts a cautious growth strategy in microfinance.

Despite these challenges, Ujjivan SFB is focusing on increasing its secured loan portfolio, which has risen to 35% from 31% in the previous quarter, with a target of reaching 40% by March 2025. However, this shift may impact margins, and loan loss provisions are expected to remain high, although some improvement in asset quality is anticipated by the fourth quarter.

Emkay Global Financial has revised its earnings estimates for FY25, FY26, and FY27 down by 24%, 14%, and 8%, respectively, and has lowered the target price to Rs 45 from Rs 55, valuing the bank at 1.1 times the September 2026 estimated adjusted book value. Despite these adjustments, the firm maintains a positive rating, citing the bank's relatively superior return on assets compared to peers and its potential transition to a Universal Bank.