Fundamental Analysis

AU SMALL FINANCE BANK LTD. 

Ticker : 540611
BUY : Rs 778.95
Target : Rs 860

AU Small Finance Bank has four strategic business units namely, consumer banking, corporate banking, commercial banking, and treasury. Its corporate segment mainly engages in providing loans to the corporate segment whereas, the retail banking segment deals in providing loans to the non-corporate customers. On the quarterly front, the net interest earned by the bank in the first quarter of FY21 came in at Rs 515.86 crore as against Rs 395.58 crore in the corresponding quarter of the previous fiscal, an increase of 30.41 per cent. The total income in Q1FY21 was Rs 1,409.91 crore, an increase of 20.68 per cent from Rs 1,168.33 crore in Q1FY20. The net profit rose by 5.51 per cent to reach Rs 200.81 crore in Q1FY21 as against Rs 190.32 crore in Q1FY20. The bank had performed better-than-expected in the last quarter. It has also started operations in South India. Deposits are increasing in the savings account (SA) and retail term deposits (TD). Hence, we recommend a BUY.