Stock to buy: target price, current market price
The current market price (CMP) of AU Small Finance Bank is Rs. 577. Motilal Oswal has estimated a target price for the stock at Rs. 680. This stock has the potential to yield an 18% return, in the coming year. It is a large cap stock with a market capitalization of around Rs. 36,976 crores.
|Stock market outlook|
|Current market price (CMP)||Rs.577|
|Potential return over 1 year||18.00%|
|Stock price at 52 week high||Rs.732.98|
|52 week low price||Rs.462.50|
The bank’s base fee revenue rose 210% year-on-year, but fell 16% quarter-on-quarter. Total AUM increased by 37% YoY and 5% QoQ to Rs. 502b, led by healthy disbursements across most segments. Total deposits increased by 48% YoY to reach ~Rs. 546b, with SA increasing by 135% to Rs. 190b.
The CASA ratio stood at 39% versus 37% in 4QFY22. Absolute RPGs increased by 5% QoQ. The NNPA ratio rose 6bp QoQ to 0.56%. The PCR ratio decreased by approximately 340 bp to 71.7%.
Why should you buy AU SFB: Motilal Oswal
“AU Bank delivered a subdued performance in the first quarter of FY23, with margin contraction and NPA ratio increasing marginally. While lower provisions supported earnings, PCR contracted by 340 bps QoQ to 72%.On the business side, advance growth was strong at 43% YoY.However, the sequential trend was weak compared to recent quarters.Deposit traction remains healthy, especially deposits in savings accounts The bank has contingent reserves of Rs. We have reduced our FY23/FY24 PAT estimate by around 3%/11%, as we price in a lower margin of 5.9% (vs. 6% previously) and higher OPEX, due to continued investment in We estimate that AU BANK will generate a CAGR of 2 6% profit in FY22-24 and RoA/RoE of 1.8%/18.3% FY24,” Motilal Oswal says in a recent brokerage report.
AU Bank is listed on the Fortune India 500 Company. For more than 25 years, the institution has helped more than 2 million customers achieve their business goals, the bank says. In the recent quarterly report, he mentioned that his C/I ratio had increased to 65%. Eventually, the bank strives to reduce it to 50%. PPPO was down 18% YoY to Rs. 3.9b due to weak Treasury performance. In addition, its overall asset quality ratio improved slightly by 2bps to 1.96% thanks to robust growth in advances.
The stock above was taken from Motilal Oswal’s brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article.