Ujjivan Small Finance Bank Ltd (UJJIVANSFB) Q2 FY27 Earnings Call: Record PAT of Rs. 365 Cr, Maintains 12-14% Micro Growth Guidance

Ujjivan Small Finance Bank Ltd held its Q2 FY27 earnings call on October 16, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Profitability with Strong Balance Sheet Momentum

• Rs.365 cr quarterly PAT — an all-time high, with NII at Rs.1,244 cr (+35% YoY), NIM at 8.4%, ROA at 2.4% and ROE at 19.7% in Q2 FY 2026-2027.
• Total deposits at Rs.50,643 cr (+29.2% YoY) — CASA at 26% in Q2 FY 2026-2027; cost of funds ~6.9%, expected to move upwards.
• Gross loan book at Rs.45,699 cr (+32.1% YoY) — secured book at 52.1% in Q2 FY 2026-2027.
• Asset quality stable — GNPA at 2.1%, NNPA at 0.3%, PCR ~85%, slippage ratio 1.6% of average gross loan book, credit cost 0.7% of ATA, and total write-offs of Rs.59 cr in Q2 FY 2026-2027.
• CRAR at 20.69% (+33 bps) — before the proposed capital raise; pro forma CRAR accretion of ~1.2% from the preferential issue.
• Branch and headcount expansion — 104 branches and 1,335 employees added in H1 FY 2026-2027.

Secured Mix Push; Housing, MSME, Gold and Agri All Expanding

• Micro banking at Rs.22,037 cr — H1 FY 2026-2027 growth ~6% against full-year FY 2026-2027 guidance of 12-14%; management maintained the guidance, citing state-wise diversification (<15% in any single state) as a buffer.
• Secured mix target of 56% by end-FY 2026-2027 — from 52% currently (52.1% of the book in Q2 FY 2026-2027), with a committed annual improvement of 5% for the non-micro banking portfolio.
• Housing crossed Rs.10,000 cr (Rs.10,056 cr) — NP at 1.2% in Q2 FY 2026-2027; affordable housing present across 23 states, micro mortgage across 17 states.
• MSME at Rs.3,871 cr (+51.3% YoY) — disbursements grew 44% YoY in Q2 FY 2026-2027, led by working capital finance, focused on the top 50 cities; South is the largest region, followed by North, West and East.
• Gold loan at Rs.1,275 cr (+209.8% YoY) — 117 branches added in H1 FY 2026-2027, with a similar number planned in H2 FY 2026-2027; agri banking at Rs.914 cr (+79.2% YoY, direct Maharashtra agri exposure nil).
• Ticket sizes rising — affordable housing at Rs.17 lakhs in Q2 FY 2026-2027; micro mortgage shifting focus from <Rs.5 lakhs to the Rs.5-15 lakhs bracket, with overall ticket size moving from Rs.7 lakhs to ~Rs.8 lakhs by the remaining quarters of FY 2026-2027; comfort with ~Rs.1.5 lakh per NUL loan.

Collections Steady at 99.7%; Drought Exposure Contained

• Collection efficiency at 99.7% — steady in Q2 FY 2026-2027 for micro banking and bucket X (99.7%-99.72%); no material collection issues in October (Q3 FY 2026-2027) to date; most branches in green, with a few at 99.6% or below not expected to increase in number.
• Group loan PAR inched up in Q2 FY 2026-2027 — CFO deemed the increase insignificant and at decimal levels; PAR changes expected only in decimal points going forward in FY 2026-2027 post the FY 2025-2026 issues.
• Karnataka drought exposure of Rs.2,400 crores — but only Rs.15.1 crores eligible under SLBC guidelines, with 80% of branches in metro/urban areas; in Maharashtra, Rs.1,682 crores of microfinance exposure with only Rs.18 crores qualifying under SLBC guidelines and 97% of branches in metro/urban markets.
• Income diversification as drought mitigant — 100% of agri portfolio customers and >60% of micro banking customers have multiple income sources; most customers are not seeking restructuring under SLBC drought guidelines.
• Micro Mortgages PAR at ~1.8% in Q2 FY 2026-2027 — management expects stabilization in the 2.5% to just under 3% range as the business seasons.
• MFI slippages annualized at 1.85% for H1 FY 2026-2027 — credit cost guidance for FY 2026-2027 unchanged given the 6-month lag in impact.

NIM Guidance Trimmed for H2; OpEx Ratio Improved; Rs.409 cr Raise Approved

• Q2 FY 2026-2027 NIM at 8.45% — H2 FY 2026-2027 guidance of ~8.35%, factoring in the 25 bps repo rate hike offset by planned DA; book yield dropped 10 bps QoQ (CFO corrected an analyst's assumption of a 28 bps QoQ increase).
• Cost of funds to rise ~10 bps in Q3 FY 2026-2027 — from the 25 bps repo rate hike, with calibrated SA/TD rate revisions planned.
• FY 2026-2027 OPEX-to-ATA guidance revised to 6.2% (from 6.4%) — citing spillover of brand campaign costs into Q3 FY 2026-2027; OPEX to ATA tracking 20 bps lower than the initial 6.4% guidance.
• Credit cost run rate of ~80 bps from H1 FY 2026-2027 — expected to continue, rather than the earlier guided 90-100 bps; H2 FY 2026-2027 credit cost guided similar to H1 FY 2026-2027.
• Rs.409 cr preferential capital raise approved in Q2 FY 2026-2027 — from QIBs (IFC, Bajaj Life, HDFC Life, Aditya Birla Sun Life), subject to shareholder approval; pro forma BVPS accretion Rs.0.8 at Sep 2026 and ~Rs.30 cr in annualized interest cost savings.
• Balance of the Rs.2,000 crore fundraise planned — board resolution valid until July 2027 (FY 2027-2028).
• ROA upside flagged — management guided it could overshoot the guided ROA range for H2 FY 2026-2027, supported by strong H1 income, facing higher interest expenses and accelerated institutional OpEx.

IRDAI Consultation a Watch Item; MD Search Underway

• IRDAI notification is a consultation paper — management awaits final guidelines, with submissions due Oct 25, 2026, and termed it premature to elaborate.
• H1 FY 2026-2027 insurance income at Rs.90 crores — ~50% historically derived from credit life insurance; management flagged that the regulatory consultation paper could impact credit life income and is engaging with IBA and the Small Finance Bank Association on the draft; income largely flows to the bottom line, with alternative strategies in place to offset potential regulatory impact.
• Draft IRDAI commission norm not expected in Q4 FY 2026-2027 — per Jitendra Jha, though it poses a risk if implemented.
• NRC mandated to search for MD successor — following Mr. Sanjeev Nautia's early retirement; management hopes to complete the process in 3-4 months starting September 1, indicating a target within Q3/Q4 FY 2026-2027.

Growth Guidance Intact; Macro and Rate Backdrops Noted

• FY 2026-2027 microfinance growth guidance of 12-14% — H1 FY 2026-2027 actual growth at ~6.5%; strategy focuses on new customer acquisition, with demand strong since Q4 FY 2025-2026, though management is exercising caution on location selection for disbursements.
• Housing momentum guided to continue — Housing head Pradeep guided that the current ~37-38% OSP growth in affordable housing and micro mortgage should continue into Q1/Q2 FY 2027-2028, with an internal plan of ~35% growth for FY 2026-2027.
• CASA ratio guided at ~28% for FY 2026-2027 — 2% lower than the 30% target, citing a 34% YoY increase in new NTP accounts; CASA growth in top-80/30 city markets at ~40% in Q2 FY 2026-2027, with pressure termed temporary.
• RBI raised its FY 2026-2027 GDP growth forecast to 7.1% — and increased the repo rate by 25 bps; management cited deficient monsoon/El Niño as risks to rural demand.
• UPI MDR seen as income upside without additional expense if implemented — but implementation has been deferred post Diwali (Q3 FY 2026-2027).
• Borrowings guidance deferred — after Rs.800 crores of borrowings were repaid in Q2 FY 2026-2027 (per analyst Sagar Shah), CFO Balakrishna Kamath stated he needed to check the total borrowings level for FY 2026-2027 and would revert offline.
• Miscellaneous income of Rs.86 crores in Q2 FY 2026-2027 — CFO guided it will grow in line with business and deposit growth.