A recent IPO Listing AU Small finance bank ltd is was an NBBC focussed in Rajsthan & now converted itself to Small finance bank.
Business:
Before launching its small finance bank operations in April, the company as an NBFC lent for vehicle finance and MSME and SME loans.These segments accounted for 50%, 30% and 20% of the FY17 gross assets under management (AUM) of Rs 10,734 crore.
As of May, AU SFB operates through 269 branches and 121 asset centres mainly from the states of Rajasthan, Gujarat, Maharashtra and Madhya Pradesh. State of Rajasthan ac counts for nearly 50% of its gross AUM but bank is planning to bring it down over the next few years.
Financials: Between FY13-FY17, the former NBFC reported a strong 30% annualised growth in its gross AUMs while disbursements grew at a comparable 29% CAGR. The net interest income expanded at 44% CAGR during the period and profit before exceptional items grew at an annualised growth of 47%.
While the net interest margin of the company stood at a strong 9.67% in FY17, with the impact of commencement of SFB operations, AU Small Finance Bank may also be forced to turn competitive in the interest rates it charges.
Gross non-performing asset ratio of the company hovered below 1% mark between FY15 and FY16. The measure jumped to 1.61% in FY17 after a three-fold jump in bad assets after recognition period for NPA shifted from 150 days to 120 days, Going ahead, further transition in NPA recognition period to 90 days past due in FY18 and stricter asset classification methods as SFB may impact bad asset proportion of the company.
MCAP of AU Small Finance Bank is around 16000 cr, which make its market leader in small finance bank among its peers Ujjivan and equitas.
So, its open for discusison & looking for any negative anybody see except CMP, lets discuss and see whether it make a conetender for long term investment.
Disclosure: No Holding in Au as of now, even not in any small finance banks mentioned above, but considering to take position if I get opportunity & reasonable valution.
