Mehabe score: 7 G Factor: 3 Piotski Score: 5 The stock has a rating OBSERVE & HOLD. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 5.
Description
AU Small Finance Bank is engaged in providing a range of banking and financial services including retail banking, wholesale banking and treasury operations and other services.Site:AUBANKMain Symbol:AUBANK
Stock trades at 1180.0, above its 50dma 1091.18. It also trades above its 200dma 989.13. The stock remains bullish on techicals
The 52 week high is at 1356.35 and the 52week low is at 616.30
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 40.79% CAGR over last 5 years
-‘s median sales growth is 39.46% of last 10 years
Weakness
– Stock is trading at 8.53 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Earnings include an other income of Rs.1451.55 Cr.
-Promoter holding has decreased over last 3 years: -3.81%
Competition
– The industry trades at a mean P/E of 19.9x. Kotak Mah. Bank trades at the industry’s max P/E of 34.71x. AUBANK trades at a P/E of 31.5x
– Industry’s mean G-Factor is 3.2 while the mean Piotski score is 6.0. AUBANK has a G-Factor of 3 and Piotski scoreof 5.
– Average 1 month return for industry is -0.2%. The max 1- month return was given by AU Small Finance: a return of 13.9 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1292.0 cr compared to Rs 1183.0 cr for period ended Mar 2020, a rise of 9.2%
Operating Profits reported at Rs 736.0 cr for period ended Mar 2021 vis-vis 573.0 for period ended Mar 2020 .
Operating Margins expanded 853.0 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 5.41 compared to Rs 15.62 for previous quarter ended Dec 2020 and Rs 4.02 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 4950.0 cr for period ended Mar 2021 vis-vis sales of Rs 4286.0 cr for the period ended Mar 2020, a healthy growth of 13.4%. The 3 year sales cagr stood at 41.0%.
Operating margins shrank to 7.0% for period ended Mar 2021 vis-vis 298.0% for period ended Mar 2020, contraction of 29100.0 bps.
Net Profit reported at Rs 1171.0 cr for period ended Mar 2021 vis-vis sales of Rs 675.0 cr for the period ended Mar 2020, rising 42.4%.
Company recorded a healthy Net Profit CAGR of 58.9% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 5056.0 cr for period ended Mar 2021 vis-vis Rs 660.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has improved its Return on Equity (RoE) metric. The RoE on Last Year basis was 27.0% compared to 21.0% over the last 3 Years. – The stock has given a return of 49% on a 1 Year basis vis-vis a return of 23% over the last 3 Years. – The compounded sales growth on a TTM bassis is 16% vis-vis a compounded sales growth of 41% over the last 3 Years. – The compounded profit growth on a TTM basis is 73% vis-vis a compounded profit growth of 59% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 31.9% vis-vis 32.05% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 18.32% vis-vis 18.94% for Mar 2021
Conclusion
– has delivered good profit growth of 40.79% CAGR over last 5 years
-‘s median sales growth is 39.46% of last 10 years – Stock is trading at 8.53 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
-Earnings include an other income of Rs.1451.55 Cr.
-Promoter holding has decreased over last 3 years: -3.81%
Fundamentally, the stock remains weak on business fundamentals. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock trades above its 50 DMA 1091.18 and is trading at 1180.0 It has shown near term bullish momentum contrary to business fundamentals. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
