UJJIVANSFB: Testing IPO High with Triple Top, Chart of the MonthFrom IPO Highs to Recovery: Is Ujjivan Small Finance Bank Finally Breaking Out After Six Years? After Posting Robust Q3 FY26 Numbers with asset quality improving and Micro Finance Cycle Turning Back. Let's Analyze in "Chart of the Month"
As per the Latest SEBI Mandate, this isn't a Trading/Investment RECOMMENDATION nor for Educational Purposes; it is just for Informational purposes only. The chart data used is 3 Months old, as Showing Live Chart Data is not allowed according to the New SEBI Mandate.
Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.
Price Action:
- Current Price: ₹63.06
- 52-Week High: ₹68.00
- 52-Week Low: ₹13.90
- Distance from All-Time High: Approaching IPO highs after prolonged consolidation
Volume Spread Analysis:
Volume Characteristics:
- Base Period (2020-2023): Subdued volumes indicating consolidation
- Breakout Period (2024-present): Notable volume expansion
- Recent spike visible in January 2026 showing institutional participation
- Current volume: 442.36M (significantly above 20-day average of 271.01M)
- Volume surge of 63% suggests strong conviction in the breakout
Volume-Price Relationship:
- Price advance accompanied by rising volume - bullish confirmation
- No negative divergences observed
- Accumulation visible during base formation with sporadic volume spikes
Base Formation & Major Patterns:
Rounding Bottom Pattern (2020-2025):
- The stock has carved out a massive rounding bottom base spanning approximately 5 years
- The blue curved trendline marks the U-shaped recovery trajectory
- Base Formation Period: Mid-2020 to Late-2024
- Base Depth: From ₹65-68 levels down to ₹13.90 (approximately 80% decline)
- This extended consolidation suggests thorough distribution at lower levels and strong accumulation
Cup and Handle Formation:
- A textbook cup & Handle pattern is visible in the 2019-2025 period
- Left rim formed in early 2024 at ₹65
- Cup bottom at ₹30-35 range (2024-2025)
- Right rim currently forming at ₹63-68 levels
- Handle consolidation occurred during late 2025
Support & Resistance Levels:
Major Resistance Zones:
- R1 (Immediate): ₹65.00-68.00 (IPO highs)
- This level may act triple top resistance (2020, 2024, 2026)
- Critical breakout zone - sustained move above this unlocks higher targets
- R2 (Psychological): ₹70.00
- R3 (Extension Target): ₹85-90 (measured move from base)
Major Support Levels:
- S1 (Immediate): ₹55.00-58.00 (recent breakout zone)
- S2 (Strong): ₹45.00-48.00 (rounding bottom neckline)
- S3 (Critical): ₹30.00-35.00 (2024-2025 lows, base support)
Trend Analysis:
Long-Term Trend:
- The stock was in a prolonged downtrend from 2020 to 2022
- Transitioned into consolidation/basing phase from 2022 to 2024
- Currently attempting to reverse into an uptrend as of late 2025/early 2026
Medium-Term Trend:
- Strong uptrend established from November 2024 onwards
- Higher highs and higher lows pattern intact
- Moving along the upper channel of the rounding bottom
Short-Term Momentum:
- Explosive momentum in January 2026 (+19% move)
- Stock attempting to reclaim IPO highs for the second time
- Price action suggests breakout on cards from 6-year consolidation
Key Technical Observations:
Breakout Attempt #2
- This is the "2nd time to break IPO Highs"
- First attempt in early 2024 failed, leading to a correction
- Current attempt appears stronger with better fundamentals and volume support
- Risk of triple top failure exists if price fails at ₹65-68 zone again
Risks & Triple Top Persistence:
- The ₹65-68 zone has proven to be formidable resistance over 6 years
- Three distinct peaks at this level (2020, 2024, 2026) create triple top risk
- A decisive close above ₹68 with sustained volume would negate this pattern
- Failure here could lead to another correction toward ₹45-48 support
Fundamental & Sectoral Backdrop:
Recent Financial Performance (Q3 FY26):
Profitability Metrics:
- Net Profit: ₹186 crore (up 71% YoY from ₹109 crore)
- Sequential Growth: 53% QoQ from ₹121.72 crore in Q2 FY26
- Nine-Month Performance: ₹411 crore (down 36% YoY) - signals recovery from challenging period
- Net Interest Income: ₹1,000 crore (all-time high, up 12.8% YoY)
- Interest Earned: ₹1,752 crore (all-time high, up 16.12% YoY)
Balance Sheet Growth:
- Gross Loan Book: ₹37,057 crore (up 21.6% YoY)
- Total Deposits: ₹42,223 crore (up 22.4% YoY)
- Disbursements: ₹8,293 crore (highest ever quarterly disbursements)
- Credit-Deposit Ratio: 88% (healthy and stable)
- CASA Ratio: 27.3% (up from 25.1% YoY)
Asset Quality Improvement:
- Gross NPA: 2.45% (improved from 2.68% in December 2024)
- Current position better than historical average of 4.84%
- Portfolio at Risk (PAR): 3.98% (down from 4.44% QoQ and 5.36% YoY)
- Provisions: ₹195 crore (down from ₹235 crore in Q2, signaling improvement)
- Micro banking collection efficiency: 99.70% (December 2025)
Business Strategy & Positioning:
Portfolio Diversification:
- Shift from unsecured microfinance to secured lending
- Secured portfolio: ₹17,829 crore (up 48.8% YoY), now 48.1% of total book
- Growth in housing loans, MSME finance, gold loans, vehicle loans, and agri loans
- Microfinance exposure reducing as part of risk mitigation strategy
Target Market:
- Focus on financially underserved segments
- Mass market banking for economically active poor customers
- Operating since 2005 (as NBFC), became Small Finance Bank in 2017
- Strong presence in rural and semi-urban markets
Growth Drivers:
- Record quarterly disbursements driven by all-around performance
- Unsecured and secured products both contributing
- Digital transformation initiatives underway
- Branch network expansion supporting deposit mobilization
Key Concerns:
- Nine-month profit decline of 36% YoY raises sustainability questions
- Non-operating income constituted 121% of PBT in Q3 (concerning dependency)
- Stretched valuations with limited margin for error
- Success hinges on sustaining Q3 momentum
Small Finance Bank Sector Outlook:
Industry Growth Trajectory:
- SFB sector growing at 20-25% CAGR
- Total advances projected to exceed ₹2 trillion by FY26
- Deposits reached ₹3.15 lakh crore in FY25
- Expected to grow to ₹3.77 lakh crore in FY26
Regulatory Environment:
- RBI reduced priority sector lending norms from 75% to 60% in June 2025
- Provides greater flexibility for credit diversification
- Pathway to universal banking license for qualifying SFBs
- AU Small Finance Bank received approval for universal bank transition they can do it too
Sector Challenges:
- Asset quality stress in microfinance portfolios across sector is Improving
- GNPA in microfinance segment spiked to 6.8% in FY25 from 3.2% in FY24
- High operating costs (5.5% of assets vs 2% for broader banking sector)
- Net Interest Margins declining sector-wide (from 7.4% to 6.6%)
- Modest CASA ratios (26.2% average) leading to higher cost of funds
- Return on Assets dropped from 2.1% to 1.0% in FY25 across SFBs
Competitive Landscape:
- Competition from commercial banks, fintech lenders, NBFCs
- Pressure on margins due to intense competition
- Need for continuous digital transformation
- Branch-intensive operating model with mandated rural presence
Microfinance Industry Trends:
Market Size & Growth:
- Microfinance sector loan portfolio: ₹3.48 lakh crore (as of December 2024)
- Expected to reach ₹5 lakh crore by FY27
- Serving over 8 crore clients across India
- Sector contributes 2-3% to India's GVA
Recent Developments:
- 80% growth in loan disbursals in recent periods
- Digital transformation accelerating across industry
- Focus on financial literacy programs
- RBI regulatory changes providing operational flexibility
- Asset quality challenges persist with over-leveraging concerns
Risk Factors:
- Vulnerable to regional economic shocks
- Weather-dependent borrower segments
- Competition from traditional banks entering microfinance space
- Regulatory compliance requirements
- Portfolio concentration risks in certain geographies
Risk Assessment:
Technical Risks:
- Triple top pattern risk at ₹65-68 resistance zone
- Failure to decisively break IPO highs could trigger profit booking
- Potential pullback to ₹48-55 support if breakout fails
- Overextended short-term momentum
Fundamental Risks
- Sustainability of Q3 profit recovery remains unproven
- High reliance on non-operating income
- Microfinance asset quality pressures sector-wide
- Operating cost structure higher than traditional banks
- Modest CASA ratio impacting cost of funds
Sector Risks:
- Regulatory changes impacting business model
- Competition intensifying from multiple fronts
- Economic slowdown could impact borrower repayment capacity
- Regional concentration exposing to local risks
Bull Case Scenario:
- Successful breakout above ₹68
- Strong Q3 FY26 results indicate operational turnaround
- Asset quality improvement trajectory well-established
- Secured lending mix improving risk profile
- Potential universal banking license in future
- Sectoral tailwinds from financial inclusion drive
Bear Case Scenario:
- Failure at ₹65-68 resistance for third time
- Nine-month profit decline raises sustainability concerns
- Sector-wide margin compression continues
- Asset quality deterioration in microfinance segment
- High operating costs pressuring profitability
- Regulatory headwinds or policy changes
My 2 Cents:
NSE:UJJIVANSFB presents an interesting technical setup the stock is at a critical juncture - attempting to break out from a 6-year consolidation. Success above ₹68 could unlock significant upside, while failure creates triple top risk. The fundamental improvement supports the technical breakout attempt, but sustainability remains a key question mark given the nine-month profit decline.
Full Coverage on my Mid-Week Newsletter coming Wednesday.
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As per the Latest SEBI Mandate, this isn't a Trading/Investment RECOMMENDATION nor for Educational Purposes; it is just for Informational purposes only. The chart data used is 3 Months old, as Showing Live Chart Data is not allowed according to the New SEBI Mandate.
Disclaimer: "I am not a SEBI REGISTERED RESEARCH ANALYST AND INVESTMENT ADVISER."
This analysis is intended solely for informational purposes and should not be interpreted as financial advice. It is advisable to consult a qualified financial advisor or conduct thorough research before making investment decisions.
