Sharekhan's research report on AU Small Finance Bank
The bank has guided for 25-30% loan growth and deposits growth of 30-35% in FY2023E. In terms of margins, the bank believes margins have peaked out in Q4FY2022 at 6.3% and overall at 5.7% in FY2022. Cost-to-Income ratio guided at 55%-57% for FY2023E/FY2024E as management believes opex growth is likely to be higher in-line with revenue growth as the bank continues to invest in constant digital innovation, helping to scale its business, and improve its brand identity. Collection efficiency across product lines is similar to healthy levels witnessed in Q4FY2022. Moreover, the bulk of restructured loans is out of moratorium and is performing well on expected lines. Overall, there should be steady improvement in asset quality going forward.
We retain our Buy rating on AU SFB with an unchanged PT of Rs. 810. Earnings growth momentum would likely surprise on the upside, led by strong AUM growth and lower credit cost. At CMP, the stock is currently trading at 4.5x and 3.8x its FY2023E and FY2024E ABV, respectively.
At 14:03 hrs AU Small Finance Bank was quoting at Rs 614.50, up Rs 0.45, or 0.07 percent.
It has touched an intraday high of Rs 620.45 and an intraday low of Rs 607.00.
It was trading with volumes of 19,212 shares, compared to its thirty day average of 83,755 shares, a decrease of -77.06 percent.
In the previous trading session, the share closed down 1.52 percent or Rs 9.50 at Rs 614.05.
The share touched its 52-week high Rs 732.90 and 52-week low Rs 467.50 on 21 April, 2022 and 27 December, 2021, respectively.
Currently, it is trading 16.16 percent below its 52-week high and 31.44 percent above its 52-week low.Market capitalisation stands at Rs 38,724.96 crore.
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