Utkarsh SFB shares up 2% after RBI nod for Mirae Asset MF to increase stake

Mirae Asset Banking and Financial Services Fund owns 4.94% of Utkarsh, as per the SFB’s last quarterly disclosure. Some of the investors in its promoter firm, Utkarsh Coreinvest, own 70% of Utkarsh SFB, including British International Investment Plc (13.9%) and RBL Bank (9.8%), among others, according to its last annual report.

The company listed on the bourses in July 2023 at ₹40. Today, its shares are trading at ₹51.

In fiscal year 2024, the company’s revenue jumped from ₹2,504 to ₹3,178 crore while profit rose from ₹404 crore to ₹498 crore.

Utkarsh SFB operates in 26 states with 888 banking outlets, including 612 micro-banking branches.

Utkarsh has a strong capital adequacy ratio of 22.57% and a 19.57% return on equity. The company’s gross non-performing assets are 2.5%, and its net non-performing assets are 0.03%.

Its ₹18,300 crore loan book comprises ₹11,300 crore in micro banking loans, ₹2,600 crore in MSME retail loans, and ₹1,900 crore in wholesale lending.

In a recent interview, the company’s CEO, Govind Kumar, said the SFB will consider applying for a universal bank licence in two to three years.

This was after a Reserve Bank of India circular laid out the below conditions for an SFB to transition into a universal bank:

• Scheduled status with a satisfactory track record of performance for a minimum period of five years;
• Shares of the bank should be listed on a recognised stock exchange;
• Having a minimum net worth of ₹1,000 crore as of the end of the previous quarter;
• Meeting the prescribed CRAR requirements for SFBs;
• Net profit in the last two financial years and
• GNPA and NNPA are less than or equal to 3 % and 1 %, respectively, in the previous two financial years.
• As of FY24, Utkarsh has a net worth of ₹2,973 crore.