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Share of AU Small Finance Bank increases in trade
AU Small Finance Bank stock rose 3.2 per cent on Monday, registering an intraday high of Rs 742.6 per share on the BSE. The Au SFB share purchase follows the small financial bank’s July-September (Q2) update.
At around 10:00 am, AU Small Finance Bank share price was up 2.39 per cent at Rs 736.15 per share. In comparison, the BSE Sensex was trading 0.32 per cent higher at 81,952.03 around the same time.
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In the AU SFM Q2 update, the bank said its total deposit for the quarter ended September 30 could stand at Rs 1,09,690 crore against Rs 97,290 crore in the previous quarter, a growth of 12, 7 percent.
Its deposits in its current account savings account (CASA) for the quarter under review are estimated at Rs 35,520 crore against Rs 32,035 crore quarter-on-quarter (QoQ), up 12.9 for hundred for the period.
Its CASA ratio, however, is expected to decline to 32.4 per cent quarter-on-quarter from 32.9 per cent in the June quarter.
AU Small Finance Bank said its Q2FY25 gross advances may rise 11% quarter-on-quarter to Rs 96,030 crore in the quarter ended September 2024, from Rs 90,702 crore in the quarter ended June 30, 2024.
AU Small Finance’s gross loan book, the bank said, is expected to stand at Rs 1,05,030 crore in the September quarter, compared to Rs 99,792 crore seen a quarter ago. This would represent an increase of 8.9 percent.
“AU Small Finance Bank recorded a healthy growth of 5.9 per cent quarter-on-quarter in gross advances at around Rs 96,000 crore. Including the securitized/assigned loan portfolio, the total loan portfolio increased by 5.2 percent quarter-on-quarter On the liability front, total deposits grew by 5.2 percent quarter-on-quarter 12.7 percent QoQ to Rs 109,600 crore. positively surprised compared to our expectations of 9.7 per cent,” said analysts at Motilal Oswal Financial Services.
The brokerage, which has a ‘buy’ call on AU Small Finance Bank with a target price of Rs 830 per share, believes the small finance bank is well positioned for strong growth, demonstrating steady improvement in profitability operational as it capitalizes on the synergies resulting from the merger with Fincare Small Finance Bank.
“A high-yielding loan portfolio following the merger and a broader product offering, particularly in the South, will facilitate profitable growth in the years to come,” MOFSL said in a September report.
He added that the bank maintains strong asset quality with stable credit costs.
Management expects gross non-performing assets to net non-performing assets (GNPA/NNPA) ratios to remain around 1.9 percent/0.6 percent through FY27 and that the ratio of provision coverage (PCR) improves to 70 percent.
Over the past year, shares of AU Small Finance Bank have gained 1.2 percent, compared to a 24 percent rise for the Sensex.
First publication: October 7, 2024 | 11:12 a.m. STI