Motilal Oswal's research report on AU Small Finance Bank
AUBANK delivered a robust performance with 9% earnings beat led by 43% YoY NII growth, stable margins and double-digit sequential business growth. Asset quality improved sharply with GNPA/NNPA ratio declining 62bp/79bp QoQ to 1.98%/0.5%, respectively, driven by robust collection efficiencies and healthy reductions. The restructured portfolio declined to 2.5% of loans (from 3.1% in 3QFY22), while PCR improved sharply by 2,420bp QoQ to 75% as the bank prudently revised its provisioning policy to reinforce its balance sheet. AUBANK further announced a bonus issue of 1:1 and recommended a dividend of INR1 per share (pre-bonus issue).
We raise our FY23E/FY24E PAT by ~6%/10% and estimate AUBANK to deliver 37% earnings CAGR over FY22-24. We expect an RoA/RoE of 2.1%/ 21.0% in FY24, respectively. Maintain BUY with a TP of INR1,625.
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