AU Small Finance Bank shares surge over 12% on strong loan AUM, deposit growth in Q3

Amid strong third quarter update, the private lender AU Small Finance Bank’s shares zoomed over 12 per cent to Rs 1,228 per share on the BSE intraday trade on Wednesday.

Global brokerage firm Morgan Stanley maintained an ‘Overweight’ stance on AU Small Finance Bank with the target at Rs 1,500 per share. It said, Q3 AUM growth was strong helped by 36 per cent YoY growth in disbursements and collection efficiency remains strong with no restructuring in Q3FY22.

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The surge in the bank’ stocks is mainly due to sequential growth of 10.6 per cent and 26.5 per cent year-on-year in total assets under management (AUM) to Rs 42,027 crore during October-December quarter of the financial year 2021-22.

The counter in the last one week has outperformed the market by soaring around 16 per cent, as compared to a 3.6 per cent rise in the S&P BSE Sensex.  While in the last three months, it slipped over 3 per cent, as against a 0.24 per cent gain in the benchmark index. 

According to Q3 business update of the bank, “Q3FY22 was near-normal quarter for the Bank with strong growth seen in advances, disbursements and deposits across all businesses and customer segments supported by a good festive season.”

The customer cashflows continue to improve supporting recovery trends and asset quality in the quarter, AU Small Finance said in a filing on Wednesday.

The bank witnessed a growth of 11.9 per cent quarter on quarter (QoQ) (+33.4 per cent YoY) on a gross advances basis during the third quarter of FY22. Meanwhile, the bank also saw a significant improvement in the overall business environment, which resulted in strong disbursements. 

The Q3FY22 disbursements were up 59 per cent QoQ (+33 per cent YoY) at Rs 8,152 crore, and Disbursements included ECLGS of Rs 48 crore in Q3FY22. The bank is witnessing strong traction in the Credit Cards business.