AU Small Finance Bank share price: Brokerages divided after senior executives make an exit from the banks management - check price target here

After senior managerial people exited the management and the bank’s clarification on the same, the brokerages have maintained a positive to neutral stance for the AU Small Finance Bank (SFB) shares.

AU Small Finance Bank’s management clarified on the recent exits in the bank, including on the resignation of internal audit head Sumit Dhir. The bank through an exchange filing on August 31, 2021, had said that Dhir resigned following personal reasons.

The shares of the bank on Wednesday reversed the falling trend and jumped at least by 7 per cent eventually to close over 2 per cent higher to Rs 1155.15 per share on the BSE.

In this regard, Citi maintains Buy call on AU SFB on its long growth runaway, improving business environment and asset quality trends with gradual net interest margin expansion. 

The brokerage in its note states recent exits are entirely driven by personal reasons and adds the stock is trading at 4.3x FY23e for likely RoE of 19 per cent. It sets a target of Rs 1500 per share.

While Nomura has a Neutral call on AU SFB, mentioning that it is positive on its long-term story but sees less comfort in the near-term outlook. The brokerage raises flag that three exits from three months largely from the audit and risk departments.

Nomura in its report said, the 10-15 per cent fall in stock price highlights a much larger concerns regarding stretched valuations and asset quality risks and adds some divergence in asset quality are difficult to comprehend. It sets a price target of Rs 1200 per share.

Earlier, the bank's Chief Risk Officer Alok Gupta had also resigned citing personal reasons. Following which, AU Small Finance Bank appointed Deepak Jain, who is currently serving as Chief Operating Officer and Key Management Personnel as Chief Risk Officer, in Gupta’s place, the bank said in filing.