MidCap private bank stock AU Small Finance Bank could be a good share for the investors to buy as the bank reported a 99.51 per cent on-year jump in net profit to Rs 190.19 crore in the quarter ended December 31. Following the quarterly result, brokerage and research firm Motilal Oswal Institutional Equities has given a ‘buy’ rating to this S&P BSE Midcap stock with an upside of over 4 per cent. AU Small Finance Bank ended today at Rs 1,022 apiece, down 4.71 per cent, on the BSE. The brokerage in its research note said that “AU Bank is focused on scaling up its key business lines of vehicle or MSME loans. It also aims to expand the new segments of housing loans, gold loans, consumer durable financing, etc.”
The shares of AU Small Finance Bank hit a 52-week high of Rs 1,105 apiece on BSE today in the morning deals following a 100 per cent year-on-year growth in PAT in December quarter of the financial year 2019-20. The company had posted a net profit of Rs 95.33 crore during the same period a year ago, AU Small Finance Bank said in a BSE filing. Motilal Oswal Institutional Equities has recommended to ‘buy’ the share with the target price of Rs 1,100. “We have reiterated AU BANK as a top idea for CY20 in our banking outlook report and believe that given the surge in profitability rich valuations are here to stay. Maintain Buy,” the brokerage said in its research report.
AU Small Finance Bank’s total income rose to Rs 1,272.83 crore from Rs 894.29 crore earlier. While total expenses rose to Rs 959.98 crore from Rs 715.62 crore in the October-December period of the preceding fiscal.
“The bank has been making adequate investments to support business growth (100 new branches and 2,736 employees added in the past one year), which will enable it to continually gain share in chosen business segments. We upgrade our FY21/FY22E PAT estimates by 12%/19% and revise our PT to INR 1,100,” Motilal Oswal said.