AUBANK is focused on scaling up its key business lines, Vehicle & MSME loans, while it is equally focused on nurturing new segments (housing loans, gold loans, consumer durable financing, etc.). Additionally, mobilization of retail deposits through digital initiatives is also gaining traction, which should help it sustain growth momentum. It aims to achieve loan book of INR700b and customer base of ~5m by FY22. Amidst a challenging environment, AUBANK has increased focus on used car financing, which is likely to benefit from faster shift towards organized players. Currently, the used car market is already 1.2x of the new car market (in volume terms). The concentration in the top-20 advances/exposures improved by 262bp/135bp YoY to 5.7%/8.3% in FY19. On the liability side, concentration of the top-20 depositors has decreased from 41% in FY18 to 25% in FY19.
AUBANK has made strong progress on the business growth front, and alongside, has made adequate investments to support the growth momentum. We expect business growth to remain robust while stability in margins and cost-control should support earnings over the medium term. Maintain Buy with PT of INR750 (4.7x FY21E BV).