AU Small Finance Bank shares hit new life high on bonus issue announcement; brokerage sees stable Q4 results

Shares of AU Small Finance Bank touched a new life high of Rs 1444.95 per share on the BSE intraday trade after surging by almost 4.5 per cent on Tuesday. The strength in the shares came mainly from the bonus issue announcement along with positive outlook for March-end quarter results for the financial year 2021-22.  

The SFB in its filing to exchanges on Tuesday said, “This is to inform that meeting of the Board of Directors of the Bank will be held on Monday, 25th April 2022 and will continue on Tuesday, 26th April 2022 at Jaipur, and following business items shall be taken up for consideration.” 

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“The Audited Financial Results of the Bank for the Quarter and Financial Year ended on 31st March 2022; To consider the proposal for issuance of Bonus Shares subject to requisite approvals; and To consider and recommend Dividend on equity shares for the financial year ended 31st March 2022.” 

At around 10:30 AM, the stock was trading higher by over 3.5 per cent to Rs 1435 per share on the BSE as compared to a 0.15 per cent fall in the S&P BSE Sensex. The counter year-to-date has gained around 35 per cent and nearly 22 per cent in the last one month on the BSE. 

According to Kotak Institutional Equities, “NIM is likely to be stable on a sequential basis at 5.9 per cent% (+50 bps Year-on-Year). Revenue growth of around 2.5 per cent YoY with strong NII (Net Interest Income) growth offset by lower other income is expected.” 

While PPOP could grow around 30 per cent YoY despite strong expense growth this quarter, the brokerage added in its earnings preview report, adding further, earnings to grow around 2X YoY and 8 per cent Quarter-on-Quarter (QoQ).  

We expect credit costs to be stable QoQ at 0.5% (2 per cent in base quarter) and discussion to focus on growth visibility across vehicle/small business segments and cost ratios, Kotak Equities said.