Stock Snapshot
Price Performance
Recommendation Rationale
Favorable growth outlook supported by strong loan growth and strategic expansion initiatives.
Basis of our Recommendation
AU Small Finance Bank has demonstrated strong growth momentum in FY26, outperforming the private banking sector in both deposit and loan growth. The bank's strategic investments in technology and distribution, along with a focus on expanding its secured loan segments and improving asset quality, position it well for future growth. However, rising costs of funds and interest rate sensitivity present challenges that need to be managed.
Why We Like This Stock
- Strong performance in both deposit and loan growth, outperforming the sector
- Strategic investments in technology and distribution to enhance efficiency
- Improved asset quality and lower provisions indicating robust demand
Things To Watch Out For
- Rising cost of funds due to recent deposit rate hikes
- Interest rate sensitivity of the predominantly fixed-rate loan book
Key Parameters
Financial Snapshot
| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 5,157 | 8,012 | 9,112 | 11,519 | 14,195 |
| Profit Before Tax (Cr.) | 2,000 | 2,792 | 3,474 | 4,683 | 5,970 |
| PBT Margin | 38.8% | 34.8% | 38.1% | 40.7% | 42.1% |
| Net Profit (Cr.) | 1,536 | 2,109 | 2,641 | 3,559 | 4,538 |
| EPS | 20.5 | 28.2 | 35.3 | 47.6 | 60.6 |
Company Overview
Show Company Profile
AU Small Finance Bank Limited offers various banking and financial services in India. The company operates through Treasury, Retail Banking, Wholesale Banking, and Other Banking Operations segments. It provides saving, salary, term, current, escrow, trade, fixed deposit overdraft, nodal and RERA, and fixed and recurring deposit accounts; foreign currency non-resident deposit; debit, credit, and prepaid cards; and safe deposit locker services. The company also offers vehicle loans for cars, two-wheelers, tractors, and commercial vehicles, as well as construction equipment; personal, home, commercial property, gold, micro business, agriculture, working capital, and construction loans; and financial institutional lending services. In addition, it provides life, health, general, fire, SME, and motor insurance; mutual funds, Atal pension scheme, and national pension system; overdraft, cash credit, bank guarantee, and letters of credit; and internet and mobile banking, collection and receivables, and payment and other merchant payment services, as well as ATM services. Further, the company offers digital banking services. Additionally, it provides government banking services to central government, state governments, central and state public sector undertakings, boards, defense, urban local bodies, and other government departments. The company operates through its bank branches, correspondents banking outlets, and business correspondents. It serves individuals, senior citizens, SMEs, NRIs, Gen Z digital natives, professionals, government institutions, corporate, partnerships, associations, and trusts. The company was formerly known as AU Financiers (India) Limited and changed its name to AU Small Finance Bank Limited in May 2017. AU Small Finance Bank Limited was incorporated in 1996 and is headquartered in Jaipur, India.