Stock Analysis

Here's What We Learned About The CEO Pay At Ujjivan Financial Services Limited (NSE:UJJIVAN)

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Ittira Davis has been the CEO of Ujjivan Financial Services Limited (NSE:UJJIVAN) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Ujjivan Financial Services

How Does Total Compensation For Ittira Davis Compare With Other Companies In The Industry?

According to our data, Ujjivan Financial Services Limited has a market capitalization of ₹31b, and paid its CEO total annual compensation worth ₹12m over the year to March 2020. Notably, that's an increase of 39% over the year before. We note that the salary portion, which stands at ₹10.7m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from ₹15b to ₹58b, the reported median CEO total compensation was ₹12m. So it looks like Ujjivan Financial Services compensates Ittira Davis in line with the median for the industry. Furthermore, Ittira Davis directly owns ₹9.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary ₹11m ₹6.4m 90%
Other ₹1.2m ₹2.1m 10%
Total Compensation₹12m ₹8.5m100%

On an industry level, it's fascinating to see that all of total compensation represents salary and non-salary benefits do not factor into the equation at all. Although there is a difference in how total compensation is set, Ujjivan Financial Services more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

NSEI:UJJIVAN CEO Compensation January 29th 2021

Ujjivan Financial Services Limited's Growth

Over the past three years, Ujjivan Financial Services Limited has seen its earnings per share (EPS) grow by 62% per year. It achieved revenue growth of 32% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Ujjivan Financial Services Limited Been A Good Investment?

With a three year total loss of 35% for the shareholders, Ujjivan Financial Services Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Ittira is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Overall, we wouldn't say Ittira is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Ujjivan Financial Services that you should be aware of before investing.

Switching gears from Ujjivan Financial Services, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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