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  3. AU Small Finance Bank shares fall over 7% post Fincare merger announcem…

AU Small Finance Bank shares fall over 7% post Fincare merger announcement, quarterly results

30 Oct 2023

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Key Takeaways
  • The merger will lead to increased market share, diversification of risk, products & services & will lead to cost savings & efficiency improvements.

  • The synergy will also improve the competitive position of the merged entity with a strong financial position through capital infusion.

  • The merger will lead to increased market share, diversification of risk, products & services & will lead to cost savings & efficiency improvements.

  • The synergy will also improve the competitive position of the merged entity with a strong financial position through capital infusion.

Fincare Small Finance Bank Unlisted Shares

Fincare Small Finance Bank

0.00%

Expert Analysis

AU Small Finance Bank announced the acquisition of Fincare Small Finance Bank via exchange filing

Expert Analysis:

  • The merger hinges on shareholder approval from both companies, regulatory consent from the RBI and India's competition regulator, and a capital infusion of ₹700 crore from Fincare's promoters.

  • Appointed date of merger: Feb 1, 2024, or mutually agreed & RBI approved.

  • SWAP Ratio - 579:2000(AU Small Finance Bank will issue 579 shares for every 2,000 Fincare shares)

  • Combined entity projected values post-merger 

    • 2.3K+ touchpoints with 98 lakh customers and around 43K employees.

    • Combined balance sheet- Rs 1.1+ lakhs Cr

  • Post-merger, Fincare's existing shareholders will retain a 9.9% stake in AU Small Finance Bank.

  • AU Small Finance Bank highlights 

    • Presence - 21 states & 3 union territories

    • Quarterly Net Profit grew by 17% (Y-o-Y), and net Interest Income grew by 15% (Y-o-Y)

    • Gross NPA stood at 1.91%

    • Net NPA rose to 0.66% from June 2023’s 0.55%

    • The net interest margin (NIM) stood at a 10-quarter low of 5.5% (projected 5.7% or 5.9% by the management)

    • Overall share growth of 6% in 2023

  • Fincare Small Finance Bank highlights as of 30th September, 2023

    • Presence in Andhra Pradesh, Telangana, Tamil Nadu and Karnataka.

    • Unlisted but Non-Convertible Debentures listed on the BSE.

    • Total assets-  Rs 14,777 Cr, Turnover-  Rs 1,360 Cr & Net Profit - Rs 219 Cr 

    • Gross NPA-  1.52% & Net NPA - 0.77%

Publisher:CNBC TV 18