Motilal Oswal is bullish on AU Small Finance Bank has recommended buy rating on the stock with a target price of Rs 720 in its research report dated January 18, 2019.
Motilal Oswal's research report on AU Small Finance Bank
PAT grew 21% YoY to INR0.95b (our estimate: INR1.04b) in 3QFY19. NII of INR3.5b (+39% YoY, +8% QoQ) came in 3% below our estimate, with the margins down 40bp QoQ to 5.6%. For 9MFY19, PPoP grew 20% YoY, while PAT increased 26% YoY. Other income stood muted at INR1.1b (-14% QoQ). Operating expenses increased 35% YoY (+2.6% QoQ) to INR2.7b, leading to a marginal rise in C/I ratio to 60.6%. AUM grew 62% YoY to INR217b, with strong growth in disbursements in vehicle and MSME books. Retail assets comprised 81% of gross AUM. Retail AUM grew 9% QoQ, while wholesale AUM declined 3.3% due to contraction in the NBFC book. Wheels/secured MSME/secured SME formed 43.0%/31.1%/4.0% of total AUM.
We estimate PAT CAGR of 40% (FY19-21) and revise our target price to INR720 (4.4x FY21E BV). Maintain Buy.
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