General

Buy Au Small Finance Bank, target price Rs 1370: ICICI Securities – Economic Times

ICICI Securities has buy call on Au Small Finance Bank with a target price of Rs 1370. The current market price of Au Small Finance Bank Ltd. is Rs 1195.35. Time period given by analyst is one year when Au Small Finance Bank Ltd. price can reach defined target.




Au Small Finance Bank Ltd., incorporated in the year 1996, is a banking company (having a market cap of Rs 37628.80 Crore).

Au Small Finance Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-12-2021, the company reported a Standalone Total Income of Rs 1772.09 Crore, up 11.06 % from last quarter Total Income of Rs 1595.65 Crore and down -7.92 % from last year same quarter Total Income of Rs 1924.53 Crore. The bank reported net profit after tax of Rs 302.05 Crore in latest quarter.

Investment Rationale
The brokerage believes the SBU structure will help AU have a differentiated approach in each of its businesses and customer journeys, and carve a niche for itself. Considering an adequate provision buffer of 2.8% of loans against stress pool of 5.7% (GNPL at 2.6% + standard restructured loans at 3.1%), focus on tapping upcoming growth opportunities (9MFY22 AUM growth at 11%) and healthy profitability (9MFY22 RoE at 16%), it upgrades the stock to BUY with an unchanged target price of Rs1,370. It is currently trading at 4.2x / 3.6x FY23E / FY24E P/BV, respectively, and it values it at 4.2x FY24E BVPS.


Promoter/FII Holdings
Promoters held 28.33 per cent stake in the company as of 31-Dec-2021, while FIIs owned 33.21 per cent, DIIs 19.99 per cent.

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