AU Small Finance Bank shares up 17% on CEO Sanjay Agarwal reappointment

Shares of AU Small Finance Bank (SFB) surged 17 per cent on Thursday after the Reserve Bank of India (RBI) approved the re-appointment of Sanjay Agarwal as managing director and chief executive officer of the lender for a period of three years. His current term was to end on April 18.

“AU SFB’s stock price has been under pressure due to the lack of clarity about management continuity, as well as the uncertain macro environment. We believe that the RBI approval removes a key overhang and will now shift the focus to the fundamental performance of the bank,” said a note by Motilal Oswal.

Prior to Thursday’s rally, shares of AU SFB were down more than 10 per cent on a year-to-date basis, despite healthy operational performance. Analysts expect the company to clock robust loan growth.

“AU SFB has been posting a healthy operating performance, led by consistently strong loan growth, the strengthening of its liability franchise and improving asset quality (on robust collections). We estimate AU Bank to deliver a 29 per cent compound annual growth rate in loans over FY23-25,” the note by Motilal Oswal added.