AU Small Finance Bank is an Indian commercial bank based in Jaipur, Rajasthan. It specialises in personal banking, retail loans, and wholesale banking.
The market cap of AU Small Finance Bank, as of mid-July 2018, is a little over Rs.18,000 crore.
Company’s Wealth and Recent Performance
- For the year ended on March 31, 2018, AU Small Finance Bank reported its total income to be at Rs.2,155.2 crore as against Rs.1,419.1 crore for the FY 2016-17. A similar increase in total income was also seen for the March quarter.
- At the same time, the company’s expenditure for the year increased to Rs.1,579 crore from Rs.849 crore over the course of the year. As a result, the massive income earned by the bank was offset by this rise in expenses. These expenses were driven by investment in infrastructure, technology, and manpower.
- Consequently, the net profit for the year was stated to be at Rs.292 crore - a sizeable reduction from a profit of Rs.821 crore reported for the previous year. A similar reduction was also seen in the company’s earnings per share (excluding exceptional item). The figure came down from Rs.30.18 reported for the FY17 to Rs.10.26 for the FY18.
- Considering the quality of the company’s assets for the FY18, its gross non-performing assets (NPAs) are worth Rs.269 crore while net NPAs are worth Rs.169 crore. This marks a sizeable increase in the two metrics with respect to the previous fiscal year. Gross NPA ratio for the year stood at 2.01% while the net NPA ratio stood at 1.27%.
- CASA ratio - current accounts to savings account ratio - stood at 32% at the end of the fiscal year.
AU Small Finance Bank Limited Stock Trends in 2018
- On January 2, 2018, the opening share price of AU Small Finance Bank was Rs.663 on the NSE. The price improved marginally by 5% over the course of the first week to enter the Rs.700 territory. The shares were traded at those levels for a couple of weeks before plummeting heavily over the course of late-January and February.
- The downfall of price came on the account of a weak performance in the Q3 FY18 and turbulent market conditions across the world. The anticipation of a hike in the interest rates by the Federal Reserve drove many markets down, including the ones in India. In just two weeks, the AU Small Finance Bank share price shed 15% and went down to be traded at levels around Rs.580. The closing price on February 28 was Rs.591.20.
- For most of March, the stock price of AU Small Finance Bank was at levels above Rs.570. The investors didn’t make any significant gains in this period. In late March, however, the stock commenced a bull run and it eventually moved on to deliver exceptional returns over the course of next few weeks.
- In early April, the share price of AU Small Finance Bank rose and the scrip, once again, ascended into the Rs.650 territory. The stocks were highly bullish on the back of positive sentiments in the market. In late April, the prices soared even higher to reach their 52-week high at Rs.748.40. The closing price on April 30, 2018 was Rs.721.85.
- The scrip was highly volatile in the month of May. The shares slipped down and the stocks were seen trading hands at levels varying from Rs.680 - Rs.710. The prices rose slightly in June however, to ascend back to their previous levels at Rs.720. This rise was soon followed by a sharp dip which saw the shares lose around 8% in value.
AU Small Finance Bank Stock Trends in 2017
- The equity shares of AU Small Finance Bank were issued through an IPO between June 28 and June 30, 2017. After this public issue of shares, the stocks were listed on the National Stock Exchange of India and the Bombay Stock Exchange on July 10. The opening price of the scrip on that day was Rs.530 on the NSE.
- The first couple of days were quite eventful for the AU Small Finance shares as the price jumped up by more than 20% to cross the Rs.680 mark. This sharp spike was almost immediately followed by a dip which took the prices back into the Rs.500 territory. The shares lost about 10% over the course of August and went below the Rs.550 mark.
- Through the months of September and October, the prices recovered gradually by a little over 10%. By early November, the AU Small Finance Bank shares found themselves back at levels above Rs.600. The share price over November rose handsomely to touch the Rs.700 mark for the first time in its brief history. However, the scrip failed to sustain at those levels and ended the year at Rs.666.80.
Should you invest in AU Small Finance Bank?
- For the financial year 2017-18, the company reported a significant increase in its revenues. However, its profits were offset by a sizeable increase in expenditures, which came on the account of investments in expanding the company’s operations. The company’s total income has grown considerably over the years.
- The organisation has a significant amount of experience in vehicle financing segment and providing loans to small, micro and medium enterprises. This was how the company operated for a long time.
- However, owing to its recent transition into a banking entity from a non-banking finance company, its income growth may not be as strong as the previous years. This new conversion also brings with it a new set of challenges and it is yet to be known how the company will face them.
- The management team of the company is considerably experienced and are quite passionate about what they do. They have been on the board for roughly a decade now and are well-versed in the way the company operates.
- Considering the performance of the stock, it has been on the market for a little over a year and in that time, the scrip has moved up to deliver good returns on a couple of occasions. However, it is important to note that this bullish behaviour was followed a bear run which saw the stocks shed their recent gains. In comparison to its peers, the company’s turnover and profits are quite decent. If you are looking to invest in this stock, it is strongly recommended that you do your own research before investing.
AU Small Finance Bank Limited is an Indian commercial bank based in Jaipur, India. It started its operation by providing vehicle loans and subsequently moved into other banking operations like deposits, insurance, current and savings account, and retail loans. In 2017, AU Small Bank was a Fortune 500 Company.
History of the Company
The roots of the company can be traced back to the year 1996, when the company was incorporated as L.N. Finco Gems Private Limited. The company started its operations with vehicle financing and subsequently expanded into the business of non-banking financial institutions in 2000. However, back then, they were allowed to do this business without accepting public deposits. Over the course of next decade, the company received investments which enabled it to expand its operations and move into other states. In 2010, AU Bank started to offer housing loans. In 2016, the organisation received its final approval from the RBI to transform its business into that of a small finance bank. In 2017 June, the company went public and listed its shares through an IPO.
Management of the Company
Mr. Mannil Venugopalan - Chairman of Board
Mr. Venugopalan presently serves as the Chairman of Board at AU Small Finance Bank. He has been a part of the bank since August 2011. Back then, he joined as an Additional Director and was subsequently appointed as a Non-Executive Director in September 2012 and in 2013, he was assigned the position of an Independent Director. He has been a part of the banking industry for more than 46 years and prior to joining AU Small Finance Bank, he served as the Managing Director and Chairman at Bank of Baroda. Mr. Venugopalan holds a Bachelor’s degree in Commerce from the University of Kerala.
Mr. Sanjay Agarwal - Managing Director & CEO
Mr. Agarwal presently serves as the Chief Executive Officer, Managing Director, and the Promoter of AU Small Finance Bank. He has been associated with the bank since 1996 and has played an important role in establishing the organisation. As a qualified Chartered Accountant, he has worked in finance, accounting, risk management, and strategic planning. He has over 20 years of experience and has been serving as the Managing Director since 2008 February and in February 2013, he was re-appointed to the same post. He graduated from the Government College, Ajmer with a Bachelor’s degree in Commerce.
Mr. Krishan Kant Rathi - Independent Director
Mr. Rathi, a qualified Chartered Accountant and Company Secretary, has been a part of the bank since 2008. He joined the organisation as an Additional Director and eventually became an Independent Director. Before joining the AU Small Finance Bank Limited, he served as Chief Financial Officer of the Future Group and as the Chief Investment Officer and Chief Executive Officer of Future Consumer Limited. In addition to this, he also serves as the Managing Director of Indianivesh Fund Managers Private Limited. He graduated from the Rajasthan University with a Bachelor’s degree in Commerce.
AU Small Finance Bank Listings in NSE, BSE, and Listings
The equity shares of AU Small Finance Bank Limited are available for trading on the National Stock Exchange of India Limited and the Stock Exchange Limited, Mumbai. The respective codes for the same are as follows:
- NSE Code: AUBANK
- BSE Code: 540611
- ISIN: INE949L01017
- Sector: Finance - General
Coming to the stock market indices, the company forms a part of the following:
- NIFTY 200
- NIFTY LargeMidcap 250
- NIFTY MidSmallCap 400
- S&P BSE AllCap
- S&P BSE Finance
- S&P BSE 500
- S&P BSE 200
- S&P BSE MidCap
19-A, Dhuleshwar Garden
Jaipur - 302001
5th Floor, E-Wing
Kanakia Zillion, Junction of CST and LBS Road,
Kurla West - Mumbai - 400070
Contact number: 1800-1200-1200
Stocks vs. Mutual Funds: here's what we recommend
Stock market investments require a lot of research and knowledge. They do not generally offer any tax benefits and are regarded as high-risk investments. Hence,it is crucial to have a diversified portfolio. At Bankbazaar, we encourage our readers to invest on mutual funds.It doesn't require a lot of knowledge and equity linked mutual fund schemes offer tax benefits. Additionally, since mutual funds comprise stocks from multiple companies, they help in building a diversified portfolio.