The 11 reports from 3 analysts offering long term price targets for Au Small Finance Bank Ltd. have an average target of 829.50. The consensus estimate represents a downside of -22.53% from the last price of 1070.70.
|Summary||Date||Stock||Broker||Price at Reco.||Target||Price at reco|
Change since reco(%)
|2020-01-23||Au Small Finance Ban..||HDFC Securities||974.55||866.00||974.55 (9.87%)||-19.12||Neutral|
We reiterate that AUBANK represents the virtues of both a bank and an NBFC. The bank's ability to deliver strong operating performance across parameters in a challenging environment, (with considerable consistency, esp. over the trailing 3 qtrs) increases our confidence on RoAE improvement at the bank. However, in view of lofty valuations (6.5x Mar-21E), esp. after the recent run-up (48% since Sept-19), we downgrade the stock to NEUTRAL. While the mgt has indicated that the bank could raise CET 1 in FY21, we have not built this. AUBANKs 3QFY20 performance exceeded our estimates across all fronts. While we remain admirers of AUBANKs strong fundamentals and business potential, were compelled to downgrade to NEUTRAL, post the recent run up. TP of Rs 866 (4.75x Dec-21E core ABV of Rs 177 + Rs 23/sh for the residual AAVAS stake).
|2019-12-24||Au Small Finance Ban..||Motilal Oswal||784.50||784.50 (36.48%)||Mgmt Note|
AUBANKs focus remains more on self-employed customers to grow its asset business supported by improving speed of execution. Average balances are INR25-30k in SA, INR110k-120k in CA and INR1.0-1.2m in FDs. Average productivity stands at ~12-15 new accounts opened per month per bank officer. AUBANK offers 28 products to customers across branches, majority of which are asset products. Asset book is gaining scale and the bank recently witnessed one of the strongest months for disbursement since inception. The bank mainly focuses on small-ticket-size loans, which provides granularity to the portfolio and ensures stable asset quality. Average ticket size is INR1.0-INR1.2m and the same has moderated over past one year as AUBANK further tightened its lending standard to maintain healthy asset quality amidst a slowing economy. Nearly 85% of vehicles are sold on finance customers themselves arrange for the loan in 15% of these cases. HDFCB and SBIN together account for ~50% of the total vehicles sold on financing.
|2019-11-13||Au Small Finance Ban..||Chola Wealth Direct||808.15||793.00||808.15 (32.49%)||Target met||Neutral|
Chola Wealth Direct
Sector: Banks/Mid Cap | Earnings Update 2QFY20 Background: AU SFB, initially incorporated as a vehicle finance company in 1996, was transformed into a Small Finance Bank in April 2017. The bank has its presence in 11 states and 1 union territory, with 428 branches, 565 ATMs, 78 asset centers and ~5,92,929 loan accounts. The bank offers a comprehensive and tailor made range of products (both asset and liability) and services to cater to the needs of various businessmen (SME and MSME) and other middle and low...
|2019-10-22||Au Small Finance Ban..||HDFC Securities||689.25||807.00||689.25 (55.34%)||Target met||Buy|
We like AUBANK's ability to sustain quality growth, particularly in challenging environs. This, we believe, is reflective of its NBFC roots even as it gains from the troubles faced by erstwhile peers. Improvement in oplev this qtr beat estimates, and will be key to RoAA improvement. While asset quality remains stable, the bank's NBFC/RE exposure does hold some risk. Superior return ratios and improving performance across metrics warrant premium multiples. Yet again, AUBANK ticked most boxes (growth, C-I, asset quality and NIMs) with its 2QFY20 performance. Contextually, AUBANKs forward march looks even better, when peers are struggling on one or other aspect. MAINTAIN BUY with a TP of Rs 807 (4.75x Sep-21E core ABV of Rs 166 + Rs 19/sh for the residual AAVAS stake).
|2019-08-10||Au Small Finance Ban..||HDFC Securities||689.75||725.00||689.75 (55.23%)||Target met||Buy|
Current asset quality trends are inspiring, amidst a bleak landscape. Increasing granularity will only help. Oplev (key to our anticipated RoAA expansion) has kicked in recently and is sustainable, in our view. Valuations are rich, but likely to persist so long as asset quality and growth hold up. Maintain BUY. Our SOTP-based TP is Rs 725 (4.75x Jun-21E ABV of Rs 148 + Rs 19/sh for AAVAS). Our recent interaction with the top management of AUBANK, at their first analyst day, bolsters our constructive stance. Managements intent to eventually convert into a full-fledged bank, via granular growth, was visible (AUBANK has to remain an SFB for at least ten more quarters). A book accretive fund raise is likely (though not immediately).
|2019-08-05||Au Small Finance Ban..||Motilal Oswal||634.65||760.00||634.65 (68.71%)||Target met||Buy|
We attended AUBANK's first Annual Investor & Analyst Day, wherein the entire top management team, led by MD & CEO Mr. Sanjay Agarwal and Executive Director Mr. Uttam Tibrewal, highlighted the bank's progress in different businesses. Management shed light on the bank's strategy to transform into a Universal' bank by FY22, by (a) maintaining strong competitive positioning, and (b) delivering sustainable growth across business segments. AUBANK remains confident of deepening its presence by offering full product suite to customers, while strong analytics and targeted customer servicing should enable higher relationship value. Management aims to build a granular retail...
|2019-07-30||Au Small Finance Ban..||Chola Wealth Direct||654.55||700.00||654.55 (63.58%)||Target met||Buy|
Chola Wealth Direct
Sector: Banks/Mid Cap | Earnings Update 1QFY20 Background: AU SFB, initially incorporated as a vehicle finance company in 1996, was transformed into a Small Finance Bank in April 2017. The bank has its presence in 11 states and 1 union territory, with 418 branches, 554 ATMs, 81 asset centers and ~5,37,053 loan accounts. The bank offers a comprehensive and tailor made range of products (both asset and liability) and services to cater to the needs of various businessmen (SME and MSME) and other middle and low...
|2019-07-28||Au Small Finance Ban..||HDFC Securities||659.45||725.00||659.45 (62.36%)||Target met||Buy|
Sustained growth on both sides of the B/S, even as peers struggle (amidst unfavourable macros) is impressive. Outperformance on growth is likely to continue as competition (NBFCs) fumbles. Our growth assumptions have a marginal downside risk as macros deteriorate. Oplev gains will drive of RoAAs hereon. We UPGRADE AUBANK's valuation multiple to 4.75x (vs. 4.5x earlier) with improving margins and cost control in sight. Strong growth, visible cost control and stable asset quality helped AUBANK tick most boxes in 1QFY20. Maintain BUY with a TP of Rs 725 (4.75x June-21E core ABV of Rs 148 + Rs 19/sh for the residual AAVAS stake).
|2019-04-25||Au Small Finance Ban..||Chola Wealth Direct||621.70||732.00||621.70 (72.22%)||Target met||Buy|
Chola Wealth Direct
Sector: Banks/Mid Cap | Earnings Update 4QFY19 Background: AU SFB, initially incorporated as a vehicle finance company in 1996, was transformed into a Small Finance Bank in April 2017. The bank has its presence in 11 states and 1 union territory, with 408 branches, 543 ATMs, 83 asset centers and ~4,95,209 loan accounts. The bank offers a comprehensive and tailor made range of products (both asset and liability) and services to cater to the needs of various businessmen (SME and MSME) and other middle and low...
|2019-04-23||Au Small Finance Ban..||HDFC Securities||606.95||680.00||606.95 (76.41%)||Target met||Buy|
The bank's demonstrable focus on growing both sides of the B/S continues to impress. With a large addressable opportunity, tepid competition from smaller NBFCs and sufficient capital, we expect growth to sustain. A reasonable fix on asset quality is an additional positive. Improvement in operating efficiency will be instrumental in driving RoAAs and is a key monitorable. AUBANKs scorching growth and near-flawless execution will keep valuations sustainably higher than peers. It holds the best of two worlds NBFCs (high yielding, granular retail assets) and SFBs (rapidly expanding deposit franchise). Maintain BUY post the 4QFY19 beat. Our TP is Rs 680 (4.5x Mar-21E ABV of Rs 151).
|2019-04-23||Au Small Finance Ban..||Motilal Oswal||606.95||720.00||606.95 (76.41%)||Target met||Buy|
NII grew 35% YoY (+11% QoQ) to INR3.9b (3% beat), while margins compressed further by 20bp QoQ to 5.1%. CI ratio stood at 60.0% in FY19 v/s 56.7% in the previous year. Other income grew 23% QoQ (-3% YoY) to INR1.3b, driven by an increase in core and distribution fees. Operating expenses increased 13% YoY (+9.6% QoQ) to INR3.0b, leading to a 232bp QoQ decline in the C/I ratio to 58.3%. AUM rose 51% YoY to INR242b, with strong disbursements growth in vehicle/MSME/NBFC books.
|2019-01-21||Au Small Finance Ban..||Chola Wealth Direct||608.00||712.00||608.00 (76.10%)||Target met||Buy|
|2019-01-19||Au Small Finance Ban..||HDFC Securities||614.80||658.00||614.80 (74.15%)||Target met||Neutral|
While AUBANK's growth and execution capabilities as well as its ability to quickly garner retail deposits are nothing short of spectacular, steep valuations compel us to maintain our NEUTRAL rating with a TP of ~Rs 658 (4.5x Dec-20E ABV of Rs 146). AUBANKs robust growth continued into 3Q (62/8% YoY/QoQ) driven by the retail book, as wholesale disbursals slowed. The CoF increased ~25bps sequentially while yields rose by a meager ~10bps, resulting in NIM compression. Asset quality slipped, with a 13% rise in G/NNPAs sequentially. The mgt conservatively continues to classify assets of ~Rs 940mn that are less than 90 DPD as GNPAs. Term deposit traction was inspiring (~20% QoQ), but SA was sequentially flat.
|2018-10-16||Au Small Finance Ban..||Chola Wealth Direct||629.15||629.15 (70.18%)||Buy|
|2018-10-15||Au Small Finance Ban..||HDFC Securities||626.00||641.00||626.00 (71.04%)||Target met||Neutral|
We continue to admire AUBANK's growth opportunities and execution capabilities. However, given the steep valuations, we maintain NEUTRAL with TP of Rs 641 (4.5xSept-20E ABV of Rs 142). AUBANKs 2Q performance was encouraging with robust AUM growth (66/17% YoY/QoQ), healthy other income (+19% QoQ) and relatively slower opex growth (13%). As expected, asset quality was stable with lower slippages (Rs 950mn, 2.03% ann.) and higher recoveries (Rs 570mn). While the CASA Ratio dipped QoQ (170bps), the SA accretion (Rs 4.9bn; ~3x QoQ) was promising. Further, the broad based fee growth was an additional positive.
|2018-10-15||Au Small Finance Ban..||HDFC Securities||626.00||626.00 (71.04%)||Results Update|
AU Small Finance Bank Ltd Q2FY19 results Comment NII increased to Rs. 321.03 Cr in Q2FY19 compared to Rs. 286.37 Cr in Q1FY19. The NII had been increasing from Q3FY18 to Q4FY18. It displayed an erratic but increasing trend from Q3FY18 to Q2FY19.
|2018-10-15||Au Small Finance Ban..||Motilal Oswal||626.00||740.00||626.00 (71.04%)||Buy|
15 October 2018 AU Small Finance Bank at INR202.2b grew 13.9%/65.6% QoQ/YoY. On book AUM (INR181.2b) was primarily led by retail AUM growth of 57.9% YoY and wholesale AUM growth of 101% YoY. The growth was driven by vehicle finance (+10.8%/47.6% QoQ/YoY), secured MSME segment (+10.7%/67.6% QoQ/YoY) and secured SME segment (-5.0%/4.
|2018-08-09||Au Small Finance Ban..||HDFC Securities||641.00||667.00||641.00 (67.04%)||Target met||Neutral|
While we admire the business model and mgt's execution capabilities, rich valuations compel us to remain NEUTRAL. Our TP of Rs 667 is based on 5x Mar-20E ABV of Rs 133. AUBANKs incredible performance sustained in 1Q as disbursements/AUM grew ~91/56% YoY and asset quality improved (G/NNPAs down 88/77bps YoY). However, margins were under pressure as CoF rose and yields failed to compensate (down 20bps sequentially). The doubling of opex (YoY) is reflective of AUBANKs continued investment in people and technology.
|2018-07-02||Au Small Finance Ban..||Chola Wealth Direct||664.10||732.00||664.10 (61.23%)||Target met||Buy|
Chola Wealth Direct
India has ~63mn MSME units and AU SFB's branch network encompasses 5 states, which account for ~35% of the total units (Top 10 states account for ~75% of the total MSME units) . Of the 63mn units, only ~5mn units (8%) have access to formal sources of credit. In FY17, the total MSME credit (from formal sources) stood at INR 16tn, of which bank credit accounts for ~84%,(ie ~INR 13tn, forming 17% of overall bank credit in FY17) and the rest by NBFCs. We expect AU SFB's AUM from MSME and SME loans (retail) to grow at a CAGR of 28% and 29% respectively over FY18-21E, outpacing the overall growth in bank credit to MSME (which is expected to grow at a CAGR of 9-11% over FY18-23E vs. the overall bank credit is expected to grow by 10-12% in FY19E), considering its aggressive stance and...
|2018-05-09||Au Small Finance Ban..||AUM Capital||700.00||800.00||700.00 (52.96%)||Buy|
In Q4FY18 and FY18 Bank's total income grew by ~71% and ~52% to Rs. 666 crore and Rs. 2,155 crore respectively, YoY. Net interest income clocked YoY growth of 30% and 20% to Rs. 287 crore and Rs. 940 crore in Q4FY18 & FY18 respectively. PAT grew by ~7% to Rs. 83 crore, YoY in Q4FY18. It has recommended a dividend of 5% in the first year of its banking operations and listing. As on March 2018, its gross loan AUM grew by 49% YoY to Rs. 16,038 crore. Gross NPA and Net NPA of the Bank stood at Rs. 270 crore and Rs. 169 crore respectively as on March 31, 2018. In Q4FY18 its Gross NPA ratio and Net NPA ratio improved...