The share price of AU Small Finance Bank increased by more than 10% in the morning session on January 5, bringing the stock’s total rise to more than 15% in the past five days. In the October-December quarter, the private sector lender recorded a sequential increase of 10.6% and a year-on-year increase of 26.5% in total assets under management (AUM) to Rs 42,027 crore (Q3FY22).

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The stock was trading at Rs 1,210.60, an increase of Rs 115.95 or 10.59% at 11:25 am. It reached an intraday high of Rs 1228.00 and a low of Rs 1,120.00. The scrip was trading with 57,080 shares, a 42.21% rise above its five-day average of 40,139 shares.

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The stock has outpaced the market in the last week, rising 16% vs a 3.6% rise in the S&P BSE Sensex. However, the bank’s stock price has dropped 3.3% in the last three months, compared to a 0.24% fall in the benchmark index. On August 24, 2021, the stock reached a record high of Rs 1,389 per share.

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“Q3FY22 was a near-normal quarter for the Bank with strong growth seen in advances, disbursements and deposits across all businesses and customer segments supported by a good festive season. The customer cash flows continue to improve supporting recovery trends and asset quality in the quarter.”, AU Small Finance said in its provisional business update.

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On a gross advances basis, the bank witnessed a growth of 11.9% QoQ (+33.4% YoY). The bank saw a significant improvement in the overall business environment, which resulted in strong disbursements. In Q3FY22, disbursements were up 59% QoQ (+33% YoY) at Rs 8,152 crore. Disbursements included the Emergency Credit Line Guarantee Scheme (ECLGS) of Rs 48 crore in Q3FY22. The bank is witnessing strong traction in the Credit Cards business. The Emergency Credit Line Guarantee Scheme (ECLGS) scheme was launched as part of the Aatmanirbhar Bharat Abhiyan package announced in May 2020 to mitigate the distress caused by coronavirus-induced lockdown, by providing credit to different sectors, especially Micro, Small and Medium Enterprises (MSMEs).

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Domestic research and broking firm Motilal Oswal has retained a ‘buy’ call on the stock with a target of Rs 1,400 per share. According to the research firm, the bank posted robust growth in advances, led by strong disbursements, due to an overall improvement in the business environment.