AU Small Finance Bank: After 11% jump in April, the stock is Axis Securities' ‘pick of the week’ – 3 reasons why
AU Small Finance Bank as its 'top pick of the week'. This is on the back of robust growth prospects, enhancements in Net Interest Margin (NIM), anticipated synergies from the merger with Fincare Small Finance Bank (SFB) to bolster Return on Assets (RoA), and the expectation of stable asset quality performance despite immediate challenges. The brokerage has a ‘buy’ call on the stock with a target price of ₹702, implying a potential upside of over 12 percent.
AU Small Finance Bank (AUSFB) is a retail-focused small finance bank offering a diverse range of products including Vehicle Finance, SME, Home Loans, and Business Banking, among others. Its target market comprises low and middle-income individuals and businesses with limited or no access to formal banking and finance channels. As of December 2023, the bank operates through 1,049 touch points across India.
The stock has lost 6 percent in the last 1 year and 19 percent in 2024 YTD. The stock has witnessed some recovery in April on strong March quarter (Q4FY24) advances and deposit growth. However, it was in the red in the first 3 months of this year, down around 1 percent in March, 10.5 percent in February and over 19 percent in January.
Currently trading at ₹638.35, the stock is over 21 percent away from its record high of ₹813.00, hit on January 8, 2024. Meanwhile, it has risen over 15 percent from its 52-week low of ₹554, hit on March 20, 2024. During the March quarter, AU Small Finance Bank reported a robust 25-26 percent growth in advances and deposits.
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