AU Small Finance Bank Q2 Results Review - Robust Earnings Beat Despite Asset Quality Challenges: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.AU Small Finance Bank Ltd. reported a Q2 FY25 PAT of Rs 5.71 billion (16% beat) fueled by healthy other income and controlled opex, which offset higher provisions.Net interest income grew 2.8% QoQ to Rs 19.7 billion (in line). NIM improved 5bp QoQ to 6.1%. AU Small Finance Bank's pre provision operating profit stood at Rs 11.3 billion (13% beat) as opex came in 6% lower than our estimate and other income stood at Rs 6.4 billion (5% beat). Cost-to-income ratio thus declined sharply to 56.7% versus 60.8% in Q1 FY25.Business growth was healthy, with advances growing at 5.8% QoQ to Rs 948.4 billion while deposits grew at a robust 12.7% QoQ to Rs 1.09 trillion. As a result, the overall CD ratio eased sharply to 86.5% (92.1% in Q1 FY25).Slippages were elevated at Rs 7.4 billion versus Rs 5.4 billion in Q1 FY25. Gross/net non-performing asset ratio increased 20 bp/12 bp QoQ to 1.98%/0.75%. Provision coverage ratio declined 229 bp QoQ to 62.8%. Credit costs as % of total assets were elevated at 0.28% (1.1% annualized). We tweak our estimates slightly and estimate the bank to deliver an return on asset/return on equity of 1.7%/16.2% by FY26. Reiterate Buy with a target price of Rs 830 (based on 3.2 times FY26E book value)..Click on the attachment to read the full report: .HUL Q2 Results Review - Battling On Multiple Fronts: Dolat Capital.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

AU Small Finance Bank Q2 Results Review - Robust Earnings Beat Despite Asset Quality Challenges: Motilal Oswal

The conversion to a universal bank will further enable healthy growth and strengthen its market position, says the brokerage.

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AU Small Finance Bank Q2 Results Review - Robust Earnings Beat Despite Asset Quality Challenges: Motilal Oswal

The conversion to a universal bank will further enable healthy growth and strengthen its market position, says the brokerage.

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