Buy Au Small Finance Bank, target price Rs 1100: Motilal Oswal

Motilal Oswal has given a buy rating to Au Small Finance Bank with a target price of Rs 1100. The share price moved down by 0.07 per cent from its previous close of Rs 873.65. The stock’s last traded price is Rs 873.

Au Small Finance Bank Ltd., incorporated in the year 1996, is a banking company (having a market cap of Rs 26668.57 Crore).

Financials
The Bank reported a Gross Non Performing Assets (Gross NPAs) of Rs 423.17 Crore (.00 % of total assets) and Net Non Performing Assets (Net NPAs) of Rs 122.83 Crore (.00% of total assets). For the quarter ended 30-09-2020, the company has reported a Standalone Interest Income of Rs 944.78 Crore, down -.95 % from last quarter Interest Income of Rs 953.80 Crore and up 16.62 % from last year same quarter Interest Income of Rs 810.13 Crore. The bank reported net profit after tax of Rs 321.88 Crore in latest quarter.

Investment Rationale
The brokerage estimates AUBANK to deliver RoA/RoE of 2.1%/17.5% in FY22E and expect credit cost of 1.7%/1.4% for FY21E/FY22E. It values the stock at INR1,100 (4.4x Sep’22E BV).

Promoter/FII Holdings
Promoters held 29 per cent stake in the company as of Sept 30, 2020, while FIIs held 30.6 per cent, DIIs 15.6 per cent and public and others 24.9 per cent.