Ujjivan Financial Services (down 7% at Rs 105) and Ujjivan Small Finance Bank (down 3% at Rs 17.40) both touched 52-week lows on the BSE in intraday trade on Monday. These equities have declined by 60% and 55%, respectively, from their 52-week highs. At 10:19 a.m., the S&P BSE Sensex was down 0.83% at 57,353 points.

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Ujjivan SFB’s stock has dropped 28% since August 20, 2021, following the exit of several board members and management leaders, notably Nitin Chugh. Following the exit of Nitin Chugh, it has engaged an experienced hand, Ittira Davis, as MD & CEO.

Ujjivan Financial Services is a non-operating holding company (Holdco) that owns 83.32% of Ujjivan SFB and has no other corporate interest.

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Emkay Global Financial Services analysts have assigned a “Sell” rating to Ujjivan Small Finance Bank (SFB), with a reduced target price of Rs 13. The brokerage firm also rates the holding company Ujjivan Financial Services as “Sell” with a target price of Rs 123.

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Ujjivan SFB has applied to the authorities for a reverse merger and would raise capital through a qualified institutional placement (QIP) of Rs 600 crore to fulfil the merger’s minimum ownership requirements, resulting in additional RoE dilution.

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“Though we believe management issues seem to be settled for now with the appointment of an internal candidate as MD & CEO, the bank will require transformational leadership to become a new-age universal bank. MFI dominance, weak asset quality, and sub-par liability/return profiles remain key concerns,” the brokerage firm said.