Fundamental Recommendation
AU SMALL FINANCE BANK LTD.
Ticker : 540611
BUY: Rs. 636.10
Target: Rs. 745
AU Small Finance Bank is an Indian small finance bank company. The company provides wholesale banking, personal banking, insurance and retail loan products and services. In Q4FY19, the bank’s overall profit grew by 42 per cent YoY, combined with a 62 per cent spike in net interest income. The bank’s AUM surged 50 per cent to Rs 24246 crore driven by both retail and small and mid-corporate loans. The bank has grown at a healthy pace, but it has not taken on incremental risk as the ratio of risk weighted assets to total assets declined to 59 per cent from 63 per cent YoY. The bank’s disbursements grew by almost 20 per cent to cross Rs 5,000 crore in Q4FY19. The bank’s balance sheet is still small, which means there is enough headroom for growth. By virtue of these factors, we recommend a BUY.
