SBI securities recently recommended buyers to look forward to the stocks by Suryoday Small Finance Bank which can offer an upside potential of 20%. Currently, the price of the stock is Rs. 227.8.
Because of their business updates for the March quarter, which indicated a double-digit increase in both advances and deposits, the majority of small financing banks (SFBs) displayed strength in the stock market in April. This was due to April’s stock market performance.
SBI Securities recommends this Stock
Suryoday Small Finance Bank has been suggested for purchase by the brokerage company SBI Securities, with a target price of ₹227.8. According to the brokerage, the stock of SFB has the potential to increase by more than twenty percent.
Through the utilization of the joint liability group (JLG) lending concept, Suryoday Micro Finance Limited was established with the purpose of extending loans to women residing in urban and semi-urban regions. The month of January 2017 marked the beginning of its activities as a small finance bank. Through its 672 branches, the bank was active in 15 states and Union Territories (UTs) across India as of the end of the year 2023. The states of Maharashtra, Tamil Nadu, and Odisha contributed significantly to the bank’s overall footprint in India. By the end of December 2023, Suryoday had managed a portfolio of ₹7,600 crore while simultaneously catering to a total of 26.3 lakh clients.
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There has been a roughly 16.55 percent increase in the shares of Suryoday Small Finance Bank over the last month, and there has been an 18.91 percent increase over the past six months.
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The brokerage business went on to add that there are four reasons why potential investors should consider purchasing Suryoday Micro Finance stock:
In addition to this, Suryoday has been expanding its business in other markets. The product mix of the bank has been steadily varied throughout time. The advances of the company amounted to Rs. 7,600 crore as of December 2023, compared to ₹5,408 crore as of December 2022. This represents an increase of 41 percent year-on-year, despite the fact that its part of the microfinance portfolio is rapidly declining.
Despite this, the percentage of microfinance loans that are included in the bank’s portfolio continues to be rather high, standing at 58% as of December 2023 (it was 61% as of March 2023; it was 67% as of March 2022). The bank has been increasing its contribution to the development of fresh products, such as home loans, commercial vehicles, Small and Medium Enterprises (MSMEs), and financial intermediary organizations, amongst other things. As of the month of December in the year 2023, the secured book accounts for fifty percent of the portfolio.
The growth in the proportion of retail deposits, in addition to the improvement in CASA deposits
The retail deposit franchise that Suryoday has been working to create has remained solid. With total retail deposit share at 82.5 percent in 3QFY24, compared to 78 percent in 2QFY24, total deposits reached ₹6,484 crore, representing a year-on-year increase of 38 percent. The share of CASA has seen a year-over-year rise of 500 basis points, despite the fact that it is still relatively low at 19 percent as of December 2023 (it was 14 percent as of December 2022). Furthermore, it intends to raise the proportion of CASA, which will continue to be beneficial for the growth of NIM in the future.
It is anticipated that the quality of assets will improve in the future
As a result of write-offs and sales to asset reconstruction companies (ARC), recoveries and upgrades, and a decrease in slippages, the gross nonperforming asset (GNPA) improved to 2.9% as of December 2023, up from 4.2% as of December 2022. The PCR level at the bank has increased to 54% as of December 2023, which is marked as an improvement over the previous year’s level of 36%.
