Shares of AU Small Finance Bank surged more than 15% in early trade on Thursday after the company’s current MD and CEO received regulatory approval from the Reserve Bank of India (RBI), which will be extended for another three years.

On Wednesday, the RBI approved the reappointment of Sanjay Agarwal as managing director and chief executive officer of AU Small Finance Bank for a three-year term until April 18, 2026. Additionally, Uttam Tibrewal has been reappointed as a full-time director of the bank for the next three years.

Shares of AU Small Finance Bank touched a 10% upper circuit at the open and extended gains to 15% to Rs 671.85 in Thursday morning trade before paring some gains. However, the stock closed at Rs 580.45 on Wednesday.

The lender’s regulatory filing added that shareholders had approved the reappointment on March 9, 2022.

The recent rise in AU Small Finance Bank’s share price puts its performance flat in 2023, while the stock has gained 15% over the past six months. However, the stock has fallen 6% in the last year. The stock is up 100% over the past five years, gaining 235% from its Covid-19 lows.

Jaipur-based AU Small Finance Bank is an Indian small finance bank established in 1996 as an auto finance company AU Financiers, and transformed into a small finance bank in April 2017. It serves low- and moderate-income individuals and micro and small businesses with limited access to formal banking and financial channels.

ICICI Securities upgraded the stock to “buy” from “add” earlier with a target price of Rs 770 from Rs 700. However, not all brokerages are bullish on the stock, as some see downside risks to the stock given its expensive valuation. Kotak Institutional Equities maintained a “reduce” rating with fair value unchanged at Rs 575.