AU Small Finance Bank shares zoom 16% after RBI approves reappointment of MD & CEO

Shares of AU Small Finance Bank (AU SFB) rallied 16% to Rs 672 in Thursday's intraday trade on BSE after the Reserve Bank of India (RBI) approved the reappointment of Sanjay Agarwal as MD & CEO of the Bank.

Sanjay Agarwal has been reappointed for a period of three years, from April 19, 2023, to April 18, 2026. Also, Uttam Tibrewal has been reappointed as whole-time Director of the Bank for the next three years.

As per media reports, over 13 lakh shares of AU SFB changed hands in a block deal on Thursday.

At 10.01 am, the scrip was trading 13.8% higher at Rs 660.6 over its last day's closing price of Rs 580.4 apiece. However, the stock has declined 6% in the last one year.

AU SFB has delivered multibagger returns to investors, with the stock rallying over 165% in the last three years.

Domestic brokerage firm ICICI Securities upgraded the stock to buy from add rating with a revised target price of Rs 770 (Earlier: Rs 700), which shows an upside potential of 17% from the current market price.

"We upgrade the stock to buy from add, as we believe that the recent correction in the stock price was unwarranted and that it is well poised to deliver >20% advance growth and continue improving the RoE trajectory," the brokerage firm said.

As per its 4QFY23 business update, the bank delivered a robust 26% year-on-year (YoY) growth in gross advances with the growth in deposit base at 32% YoY. It recorded a flat quarter-on-quarter (QoQ) CASA ratio at 38.4% in Q4FY23.

"As per its Q4FY23 business update, demand across products remained robust and incremental growth was not skewed toward any one segment. Further, its new business initiatives showed strong traction, as reflected in the credit card issuance of 0.5mn with monthly spends crossing Rs 10 billion in March’23 and the QR code deployment surpassing the 1mn mark," ICICI Securities said in a report.

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