Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

AU Small Finance Bank Limited - Q2FY21 Result Update - YES Securities

Posted On: 2020-10-30 08:21:20


Encouraging operating and collections performance; high valuation caps upside, so retain REDUCE

Unarguably, AU Bank is a solid franchise with strong potential growth and profitability prospects. And Q2 FY21 results, particularly the recovery in customer activation and collection efficiency, demonstrates this. With variance in these collection parameters not that significant from pre-Covid levels, the Management decided to not make any additional covid-related provisions (at 1% of adv. v/s current non-paying portfolio at 2.5-3%). With resolution mechanisms like restructuring and ECLGS available, the eventual credit cost spike for FY21 is likely to be lower than our previous expectations. Also, NIM should get a fillip from declining funding cost, reduction in surplus liquidity, improvement in loan traction and fixed-rate retail book. We estimate RoA increasing to 1.8-1.9% in FY22 sans any stake sale gains in Aavas and substantial treasury income. AU SFB trades at elevated valuation of 4.2x FY22 P/ABV for the aforesaid RoA delivery, and this holds us back from changing our current stance, as we see relative stock underperformance in the coming months.

Strong core operating performance

- AU delivered a strong operating performance with a 14% core revenue (NII + Core Fees) and PPOP beat and 86% earnings beat (much lower than anticipated provisions) on our expectations.

- AUM grew by 2% qoq (v/s expectation of remaining flat), driven by healthy traction on SBL MSME and robust growth in home loans on a small base.

- Disbursements were nearly 2x of Q1 FY21 level and were at 71% of Q2 FY20 level. However, September disbursements were 99% of previous year level.

- Reported NIM improved 30 bps qoq to 5.3% on the back of 20 bps reduction in the cost of funds (strong growth in low-cost CASA and reduction in TD rates) and some improvement in LDR.

- The bank maintained excess liquidity during the quarter which had an approx. impact of 18-20 bps on NIM. It is now focusing on reducing this buffer.

- Reduction in reported Gross/Net NPL levels due to low slippages on account of moratorium and SC stand-still. Including impending slippages not classified due to SC order, the GNPL would increase by only 10 bps (bank has made some contingent prov. on it).

- Collection efficiencies in September was near normal with 78% customer activation v/s 80% in usual course. Complete moratorium customers have consistently come down since June (11% of borrowers), to 5.5% by end August and 2.5-3% at present.

- Based on activity levels of complete moratorium cases and collection feedback, the bank has not made any further COVID-19 related provisions (continues to be at Rs2.8bn, 1% of gross advances).

- Capital adequacy remains strong with CRAR and Tier 1 at 21.5% and 18.3% (against a minimum requirement of 15% and 7.5%) respectively. Further, the Bank holds 4.57% stake in Aavas Financiers (as on 30th Sep'20).

Shares of AU Small Finance Bank Ltd was last trading in BSE at Rs.775 as compared to the previous close of Rs. 781.2. The total number of shares traded during the day was 3725 in over 412 trades.

The stock hit an intraday high of Rs. 790 and intraday low of 775. The net turnover during the day was Rs. 2905560.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com



Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Metropolis Healthcare - Nov 25, 2020 - Angel Broking

NTPC - Showcase of strength & competitiveness - ICICI Securities

Telecom - Market Share TRACKER - Bharti is narrowing the gap on incremental market share vs RJio - ICICI Securities

Cochin Shipyard - Q2FY21 Result Update - ICICI Direct

Engineers India - Q2FY21 Result Update - ICICI Direct

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct

Initiating Coverage on Sudarshan Chemical - Leaping into the league of giants - HDFC Securities

Earnings Wrap Q2FY21: Earnings outperform, post Covid recovery picks up steam - ICICI Direct

Vodafone Idea Positive development beneficial for IDFC first bank - Angel Broking

Lakshmi Vilas Bank - Angel Broking



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019