Sharekhan has given Buy recommendation for AU Small Finance Bank with a target price of Rs. 1621 in its research report issued on Apr 26, 2022

Sharekhan’s research report on AU Small Finance Bank

AU Bank reported Q4FY2022 PAT at Rs. 346 crore, which was ahead of street expectations (Rs.320 crore). PAT grew by 105% y-o-y/15% q-o-q due to strong growth in net interest income and lower tax rate (due to refund adjusted). NII grew by 43% y-o-y/14% q-o-q, aided by reduction in cost of funds and strong AUM growth of 27% y-o-y. Incremental cost of funds during the quarter was 5.3%. NIM remained stable at 6.3% q-o-q. Asset quality significantly improved during the quarter with both GNPA and NNPA ratios falling by 62 bps q-o-q and 79 bps q-o-q to 1.98% and 0.5%, respectively. PCR stood at 75% in Q4FY2022 versus 51% in Q3FY2022. The stock is currently trading at 5.2x/4.4x its FY2023E and FY2024E ABV.


We maintain Buy with a revised PT of Rs. 1,621. We believe growth momentum would surprise on the upside and earnings are going to support rich valuations.

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