Check Before You Invest : AU Small Finance Bank Ltd

BSE: 540611 NSE: AUBANK ISIN: INE949L01017

| Sector: BFSI | Industry: Bank - Private

Snapshot

Q.1 Which industry/sub-sector does AU Small Finance Bank Ltd belong to?

AU Small Finance Bank Ltd belongs to the BFSI sector, operating specifically within the Bank - Private segment.

Q.2 Is AU Small Finance Bank Ltd a good quality company?

AU Small Finance Bank Ltd is a good quality company, based on a consistently good 3-year financial track record.

Q.3 Is AU Small Finance Bank Ltd undervalued or overvalued?

AU Small Finance Bank Ltd appears Somewhat Undervalued, as its key valuation ratios are below with their past averages.

Q.4 Is AU Small Finance Bank Ltd a good buy now?

AU Small Finance Bank Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of AU Small Finance Bank Ltd?

AU Small Finance Bank Ltd Total Income growth is 19.89% for FY-2017, which is above its 3-year CAGR of NA%, indicating faster growth.

Q.2 Total Asset growth of AU Small Finance Bank Ltd?

AU Small Finance Bank Ltd Total Asset growth is 4.71% for FY-2017, which is above its 3-year CAGR of N/A%, indicating faster growth.

Q.3 Capital Adequacy ratio of AU Small Finance Bank Ltd?

AU Small Finance Bank Ltd Capital Adequacy ratio (CAR) is 20.06% for FY-, which is above the regulatory requirement of 12%, indicating strong capital position.

Q.4 Asset Quality of AU Small Finance Bank Ltd?

AU Small Finance Bank Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 2.28% for FY-, which is above its 3-year median 1.67%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 0.74% which is above its 3-year median( 0.55%), indicating deteriorating asset quality.

Ownership & governance

Q.1 Promoter shareholding and pledge status of AU Small Finance Bank Ltd?

Promoters hold 22.76% of the AU Small Finance Bank Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of AU Small Finance Bank Ltd vs Industry Peers?

AU Small Finance Bank Ltd AUM CAGR is N/A%, compared to the 3-year industry median CAGR of 11.29%, indicating slower growth and losing its market share.

Q.2 Profit metrics (NIM, PPOP, RoA) of AU Small Finance Bank Ltd vs industry peers

AU Small Finance Bank Ltd profit metrics are in line with the industry median level of 7.8%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	3-year Industry Median
NIM%	-	3.92
PPOP%	-	18.17
RoA%	-	1.3

Q.3 Operating efficiency of AU Small Finance Bank Ltd vs industry peers?

AU Small Finance Bank Ltd Cost to Income () is below the industry median of (54.8); while the current ROE (14.9) are above than the 5-year average Industry ROE (14.2). This shows that the business is positioned in the middle quartile of the industry.

Operating Efficiency

	Current Level	3-year Industry Median
NIM%	-	3.92
PPOP%	-	18.17
RoA%	-	1.3
Cost to Income%	-	54.8
ROE%	-	14.2

Valuation & price assessment

Q.1 Stock return of AU Small Finance Bank Ltd over the last decade?

Over the last 5 years, the stock has delivered a CAGR of 17.1% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	-	17.1%	14.1%	50.1%

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	3-year Historic Median	3-year Industry Median
Price to Earnings	41.89	30.11	12.34
Price to Book	-	3.75	1.39
Price to Sales	53.27	4.12	1.59
EV to EBITDA	-	15.48	7.02

Q.4 Valuation ratios of AU Small Finance Bank Ltdvs historical and industry averages?

The current Price to book ratio (P/B) 0% is lower than its historical median of 3.75%, indicating that at the current price the stock is undervalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

AU Small Finance Bank Ltd return on invested capital (ROIC) is 12.51% for FY-2017, is higher than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value creation.

Check more companies

1. IDBI Bank

2. AU Small Fin. Bank

3. Indusind Bank

4. Federal Bank

5. Yes Bank

6. IDFC First Bank

Check trending companies

1. Amara Raja Energy & Mobility Ltd.

2. Vishal Mega Mart Ltd.

3. Acme Solar Holdings Ltd.

4. Nava Ltd.

5. SJVN Ltd.