Stocks of AU Small Finance Bank Limited dipped around 2.5 percent today and closed at Rs 644 levels. The scrip observed an intra-day low figure of Rs 630.85 representing a downfall of nearly 5 percent.
This week, the company announced its results for the March quarter as well as the financial year ending 2023. Details regarding the basic operational parameters are been discussed later on in the report.
AU Small Finance Bank is engaged in providing financial services such as personal & wholesale banking, retail loans, insurance, etc. It generates a majority of revenue from the ‘Retail banking’ segment. The company conducts operations within the country only.
The company has been successful in improving its revenues and PAT numbers in recent quarters. Revenues of the company have gone up from Rs 2,413 crores in Q2 to Rs 2,608 crores in Q3. Moreover, the after-tax profits grew from Rs 393 crores to Rs 425 crores during the same period.
Having a look on a yearly basis, the revenues have increased from Rs 6,915 crores in FY21-22 to Rs 9,240 crores in FY22-23. Net profits of the company showed a shift from Rs 1,130 crores to Rs 1,428 crores representing an increase of approximately 26 percent.
Digging into some Bank-specific ratios, the gross, as well as net NPA ratios of the company, have shown a positive intent relative to the previous quarters. The gross NPA ratio went down from 1.81 percent in Q3 to 1.66 percent in Q4. Moreover, the net NPA ratio reduced from 0.51 percent to 0.42 percent during the same period.
Sharekhan gave a ‘Buy’ recommendation on the stock with a target price of Rs 800 indicating an upside of around 24 percent as compared to the current price levels.
The rationale behind giving such a recommendation is contributed by stable margins and accelerated asset & investment growth.
According to the latest shareholding data available for the March quarter, promoters have consistently reduced their stake in the company with their current shareholding of 25.54 percent. On the other hand, Foreign Institutional Investors (FIIs) currently hold a 39.71 percent stake in the company.
Written by Amit Madnani
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