AU Small Fin Bank hits 10% lower circuit for third day; tanks 59% in 1 mth

The financial sector would be the most impacted across parameters - slowing demand, rising yields and increasing delinquencies, due to a series of lockdowns and shutdowns, analysts said.

Shares of AU Small Finance Bank (SFB) were locked in the lower circuit for the third straight day, down 10 per cent at Rs 474, on the BSE on Wednesday on expectation that the bank's growth may take a knock due to rise in bad loans amid coronavirus (Covid-19) outbreak.

Till 11:54 am, a combined 853,794 shares have changed hands on the NSE and BSE, and there were pending sell orders for 29,321 shares, exchange data shows.

The stock of the private sector lender was trading at its lowest level since its listing in July 2017. In the past one month, it has tanked 59 per cent, as compared to a 34 per cent fall in the S&P BSE Sensex.

AU SFB's customer-base includes low and middle income individuals and micro/small businesses. Further, it operates in the retail asset financing segment, with the vehicle financing segment accounting for 42 per cent of its assets under management (AUM). Its product portfolio also includes MSME and SME financing, construction finance, loans to non-banking finance companies (NBFCs), business banking, gold loans, home loans, agri-SME loans, unsecured personal loans (PL) and consumer durables (CD).

According to analysts at Emkay Global Financial Services, the financial sector would be the most impacted across parameters - slowing demand, rising yields and increasing delinquencies, due to a series of lockdowns and shutdowns.

Though the impact of the epidemic would be partial during Q4FY20 earnings (limited to the month of March), the full impact stemming from Covid-19 on growth and delinquencies would be visible from Q1FY21, they say.

"Virus spread containment measures like social distancing is new for India, which has grown on the basis of community model. We believe that the asset-quality concern under the current scenario would not be restricted to retail/SME/MSME but would spread through the corporate segment as well," the brokerage firm said in sector update.