Buy Suryoday Small Finance Bank, target price Rs 155: ICICI Securities

ICICI Securities has buy call on Suryoday Small Finance Bank Ltd. with a target price of Rs 155. The current market price of Suryoday Small Finance Bank is Rs 88.45.

Time period given by analyst is one year when Suryoday Small Finance Bank Ltd. price can reach defined target.

Suryoday Small Finance Bank Ltd., incorporated in the year 2008, is a banking company (having a market cap of Rs 948.00 Crore).


Suryoday Small Finance Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2021.


Financials
For the quarter ended 30-06-2022, the company reported a Standalone Total Income of Rs 294.60 Crore, up 14.83 % from last quarter Total Income of Rs 256.55 Crore and up 23.50 % from last year same quarter Total Income of Rs 238.54 Crore. The bank reported net profit after tax of Rs 7.75 Crore in latest quarter.

Investment Rationale
Near term asset quality concerns persist, given the elevated stress pool at 16%, but revival in AUM growth in FY23E with adequate capital at 36% and gradual moderation in credit cost in H2FY23E will help Suryoday revive RoA of >1% by FY23E. The brokerage believes current valuation (0.5x FY24E PBV) captures most negatives, hence, maintains BUY with an unchanged TP of Rs155, valuing the stock at 1x (vs 1.25x earlier) on Sep-23E BVPS.

Promoter/FII Holdings
Promoters held 28.01 per cent stake in the company as of 30-Jun-2022, while FIIs owned 9.32 per cent, DIIs 22.86 per cent.