Buy Au Small Finance Bank, target price Rs 1175: Motilal Oswal

Motilal Oswal has buy call on with a target price of Rs 1175. The current market price of Au Small Finance Bank Ltd. is Rs 1118.75.

Time period given by analyst is one year when Au Small Finance Bank price can reach defined target.
Au Small Finance Bank Ltd., incorporated in the year 1996, is a banking company (having a market cap of Rs 34855.50 Crore).

Financials
For the quarter ended 31-03-2021, the company reported a Standalone Total Income of Rs 1569.01 Crore, down -18.47 % from last quarter Total Income of Rs 1924.53 Crore and up 14.81 % from last year same quarter Total Income of Rs 1366.60 Crore. The bank reported net profit after tax of Rs 168.98 Crore in latest quarter.

Investment Rationale
AUBANK posted moderation in loan growth, largely affected by the regional lockdowns. Systemic credit growth remained weak, with 1% decline in FY22YTD. However, total ECLGS disbursements remained high during the quarter. On the other hand, deposit growth came in strong, led by robust CASA growth. The CASA ratio, therefore, continued to improve.On the asset quality front, the total collection efficiency surged in Jun’21, while the stable QoQ GNPA ratio gives us comfort. It maintains Buy rating with TP of INR1,175/share (4.3x FY23E BV).

Promoter/FII Holdings
Promoters held 28.5 per cent stake in the company as of March 31, 2021, while FIIs held 36.4 per cent, DIIs 16.2 per cent and public and other 18.9 per cent.