In its March 23, 2023 research report, Sharekhan advised a buy recommendation on AU Small Finance Bank with a target price of Rs 800.
Share Khan’s research report on AU Small Finance Bank
In the short to medium term, the bank expects loan growth of 25-30%. We believe that the upside risk to the loan growth forecast remains, despite the fact that the balance-sheet expansion strategy has moved from asset-led to liability-led. We are not too worried about the high open increase since we think that expedited investments will help the franchise sustain growth and extend new revenue and activity streams, with the ultimate objective of being a universal bank.Â
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Currently, the company is selling at 3.1x/2.7x its FY2024E/FY2025E ABV. The immediate focus would be on the RBI’s approval of the reappointment of its current MD and CEO, whose term expires in April 2023.
Outlook
We maintain our Buy recommendation on AU SFB, with a PT of Rs. 800 unchanged. With the correct strategy in place on both the asset and liability sides, as well as excellent execution skills, AU SFB has developed a robust franchise and has a clear road map for its long-term growth path.
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