Domestic brokerage and research firm Motilal Oswal participated in AU Small Finance Bank (SFB) The virtual meet where the bank’s management highlighted how better digital capabilities are helping transform the bank by driving business growth.
Shares of AU Small Finance Bank have gained over 8% in the last five trading sessions. The brokerage sees more upside as it has . The bank stock has a buy rating with a target price of 1,550 per share, indicating a potential increase of over 33% from current levels.
The Bank is reporting a strong operating performance and strong business growth, while asset quality has been particularly resilient amid a challenging economic environment.
“With the recovery in economic activity (as reflected by key economic indicators – GST collections, GDP growth and PMI), the bank appears on track to deliver better growth while the retail deposit mix continues to improve to support the margin profile. keeps. Collection efficiency is healthy at 106% and the bank has contingency reserves 3 billion (75bp loan), which provides further relaxations,” the note added.
According to Motilal Oswal, wheels and home loans are the major business drivers following strong pressure from the government for roads/other wheel related infrastructure in the budget.
AU Small Finance Bank has divided its business into 10 SBUs, where each SBU will have its own structure/growth strategy based on shared scope and support functions. The brokerage’s note highlights, the bank is working on enhancing its digital banking across product range, which is aiding in sustainable growth.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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