It is the earnings season and companies are reporting numbers for the quarter ending March 31, 2022 in full swing. There have been many hits and misses as far as the numbers are concerned. Here are a few stocks that have reported block buster set of numbers.
AU Small Finance Bank: Robust performance
According to Motilal Oswal Institutional Equities AU Small Finance Bank reported 4QFY22 PAT of Rs 3.46 billion (9% beat, 105% YoY), driven by robust business growth, strong NII and lower tax expenses.
Asset quality improved sharply with GNPA/NNPA ratio declining 62bp/79bp QoQ to 1.98%/0.5%, respectively, driven by robust collection efficiencies and healthy reductions. The restructured portfolio declined to 2.5% of loans (from 3.1% in 3QFY22), while PCR improved sharply by 2,420bp QoQ to 75% as the bank prudently revised its provisioning policy to reinforce its balance sheet.
Bonus issue along with solid quarterly numbers
AU Small Finance Bank has also announced a bonus issue of 1:1 and recommended a dividend of Re 1 per share (pre-bonus issue). This is good news for the shareholders of the company.
"AU Small Finance Bank delivered an excellent performance characterized by robust business growth, steady margins and remarkable improvement in asset quality with PCR taking a giant leap to 75%. On the business front, the retail deposit mix continued to improve, while AUM growth remained strong with disbursements displaying healthy momentum," Motilal Oswal Institutional Equities has said.
Price target of Rs 1,625 on the stock of AU Small Finance Bank
Asset quality improved significantly supported by highly impressive collection efficiency, which stood at 106% for FY22.
"The bank carried contingent reserves of Rs 1.57 billion (34 basis points of loans), which coupled with 16% coverage on restructured assets provide comfort. We raise our FY23E/FY24E PAT by 6%/10% and estimate AU Small Finance Bank to deliver 37% earnings CAGR over FY22-24. We expect an RoA/RoE of 2.1%/ 21.0% in FY24, respectively. We maintain our BUY rating on the stock with a target price of Rs 1,625 (premised on 4.5x FY24E ABV)," Motilal Oswal Institutional Equities.
The above stock is picked from the brokerage report of Motilal Oswal Institutional Equities. Investing in equities poses a risk of financial losses and investors should understand the nature of the risk. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.