The 14 reports from 3 analysts offering long term price targets for Au Small Finance Bank Ltd. have an average target of 761.33. The consensus estimate represents an upside of 26.66% from the last price of 601.10.
|Summary||Date||Stock||Broker||Price at Reco.||Target||Price at reco|
Change since reco(%)
|2020-05-28||Au Small Finance Ban..||HDFC Securities||398.10||549.00||398.10 (50.99%)||Target met||Accumulate|
Banks' core spreads and NIMs are likely to compress in the near term. Our stance is premised on the following, (1) faster growth in high yielding segments which supported WALR (o/s) is likely to slow, this may be inferred from by the sharp dip in WALR (fresh) which has dipped sharply in Mar-20, (2) the effects of lower MCLRs will become more pronounced, (3) external benchmark-linked loans will see a significant fall in yields and a gradual rise in share and (4) slower re-pricing of liabilities will limit benefits of lower TD rates although, SA rate cuts will provide some cushion here. Over FY20 so far, weve seen divergent NIM trends, but most of our coverage banks saw NIM improve. The drivers of movement on either sides, however, varied vastly.
|2020-05-18||Au Small Finance Ban..||HDFC Securities||396.95||549.00||396.95 (51.43%)||Target met||Buy|
Additional clarity on the moratorium front will emerge in 1QFY21E and that on anticipated asset quality outcomes will emerge when lockdown measures ease. We've increased our provision estimates for most of our coverage banks this qtr. Our existing thesis on the sector remains as is. Banks, with strong granular liability franchises, reasonable asset quality performance, lesser exposure to vulnerable segments and sufficient capital are likely to emerge stronger. We prefer ICICIBC and AXSB amongst the larger banks and CUBK amongst the smaller banks. Additional disclosures and management commentary provide an interesting (and varying) perspective of the on-ground situation and potential impact of COVID-19 on the sector. Key takes from additional disclosures and commentary include- (1) borrowers representing ~25-71% of loans (which have declared results till 14-May-20) have availed moratorium as per the RBIs 27-Mar-20 circular, (2) several banks made provisions, in addition to the RBI mandated provisions, based on their assessment of the potential impact of COVID-19, but the relative quantum varied vastly, (3) most banks shored up their PCR (partly optical due to the standstill classification benefit), and (4) many hinted at measures to bring down costs in FY21E and halt/ slow branch expansion plans.
|2020-05-04||Au Small Finance Ban..||HDFC Securities||491.20||549.00||491.20 (22.37%)||Target met||Sell|
Post the sharp correction, we upgrade to ADD (TP of Rs 549, 3.3x FY22E ABV+ Rs 14 for the residual AAVAS stake). AUBANK saw strong b/s growth in 4QFY20, amidst a challenging external environment. As with other banks, AUBANKs PAT was hit by higher provisions. AUBANK is better-placed vs. its SFB peers on assets quality (largely secured book) and liability franchise (granular deposits). Given the systemic issues, we believe mid-tier banks (particularly SFBs) will face challenges in deposit mobilisation, in addition to higher stress. Dwindling competition from NBFCs, high CRAR, and a credible execution track record underpin our positive stance.
|2020-05-04||Au Small Finance Ban..||Motilal Oswal||491.20||675.00||491.20 (22.37%)||12.29||Buy|
4 May 2020 AU Small Finance Bank (AUBANK) reported subdued earnings, impacted by higher provisions (INR1.4b) toward SMA accounts. Overdue loans stood at INR23b (8.5% of loans) as of April20 v/s INR36b as of 1 Mar20. 29% of customers (25% of the loan book) availed moratorium, which would be the key monitorable in the near term. On the business front, loan growth moderated, while deposits stood healthy. We cut our earnings estimate for FY21/22 by 18%/10% as we factor in high credit cost and moderation in business growth. AUBANK reported 3.5% YoY growth in PAT to INR1.2b, affected by higher provisions of INR1.5b, as it made ~5% provisions (INR1.4b) toward SMA accounts, as per an RBI circular. NII grew 43% YoY (+10% QoQ) to INR5.5b NII/PPoP/PAT grew 42%/66%/77% respectively while core PPoP/adjusted PAT (adjusted for stale sale in Aavas) grew 57%/56% respectively.
|2020-04-20||Au Small Finance Ban..||HDFC Securities||29.65||509.00||29.65 (1927.32%)||Target met||Sell|
Consequently, we prefer ICICIBC, AXSB and KMB amongst the large caps. We prefer CUBK amongst the pack of smaller regional banks. We maintain our REDUCE rating on RBK and KVB, despite their sharp underperformance. Recent events (YES and COVID-19) are likely to have multiple order and far reaching impacts on the banking sector. COVID-19 will obviously impact growth and asset quality. The events at YES have impacted depositor sentiment, causing them to become more risk-averse, we believe. Consequently, the less obvious (but equally important) impact is expected to play out on the liabilities side. In such a scenario, we believe deposit flows will become more polarised. Larger banks, with strong granular liability franchises, reasonable asset quality performance and sufficient capital are likely to emerge stronger.
|2020-01-24||Au Small Finance Ban..||Chola Wealth Direct||1070.70||1060.00||1070.70 (-43.86%)||Target met||Hold|
Chola Wealth Direct
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 presence in 11 states and 1 union territory, with 496 branches, 310 ATMs, 31 asset centers and ~6,59,904 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...
|2020-01-23||Au Small Finance Ban..||HDFC Securities||974.55||866.00||974.55 (-38.32%)||Target met||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 (-23.38%)||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 (-25.62%)||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 (-12.79%)||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 (-12.85%)||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 (-5.29%)||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 (-8.17%)||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 (-8.85%)||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 (-3.31%)||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 (-0.96%)||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 (-0.96%)||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 (-1.13%)||Target met||Buy|
|2019-01-19||Au Small Finance Ban..||HDFC Securities||614.80||658.00||614.80 (-2.23%)||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 (-4.46%)||Buy|