Webinar :Register now for Commodity Ki Paathshala webinar on ‘FPOs & Agriculture Marketing-The Beginning of a New Era’ on January 22, 4pm

Hold AU Small Finance Bank; target of Rs 880: Emkay Global Financial

Emkay Global Financial recommended hold rating on AU Small Finance Bank with a target price of Rs 880 in its research report dated October 29, 2020.

November 05, 2020 / 12:14 PM IST
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Emkay Global Financial's report on AU Small Finance Bank


Despite moderate loan growth, AU SFB reported higher PAT of Rs3.2bn vs. estimate of Rs1.7bn on a one-off gain from the stake sale in Aavas Financiers (Rs1.25bn) and lower provisions as the bank chose higher profitability instead of shoring up its relatively moderate contingent provision buffer (~1% of AUM). CASA ratio improved sharply (up 600bps qoq) to 20%, driven by strong SA growth, which in turn was driven by the continued focus on retail customer acquisition, including NRI/Sr Citizens and reducing the dependence on bulk deposits. Customer activation rate in Sep was better at 78% vs. 80% at BAU levels. However, nearly 3% of the customers have still not paid any EMIs in Sept/Oct although the bank remains hopeful of recoveries in this pool and thus has not made any additional provision in Q2.


Outlook


We raise our earnings estimates by 13-20% over FY21-23E and thus revise TP to Rs880 (3.8x Dec FY22E core ABV). Maintain Hold given rich valuations. We believe that the stock’s performance hereon should largely track growth/asset-quality movement.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Broker Research
first published: Nov 5, 2020 12:14 pm

stay updated

Get Daily News on your Browser
Sections