AU SFB Q4 Results Review: Poised To Deliver Historical High RoA Levels — Centrum Broking Hikes Target Price

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Centrum Broking Report

AU Small Finance Bank Ltd.'s results exceeded our expectations, driven by strong cost control and a sequential improvement of over 600bps in provision coverage. Looking ahead, we expect AU SFB to deliver robust book value growth of 18% CAGR over FY25–FY27E, alongside an attractive return profile with RoA expected to reach 1.85% by FY27.

Our positive outlook is supported by multiple factors:

1. Merger synergies: The integration of Fincare is already translating into tangible benefits, as reflected in the disciplined growth of operating expenses;

2. Cross-sell potential: Management has articulated a clear long-term strategy to leverage cross-selling opportunities arising from the merger;

3. Asset quality improvement: The pressure from the unsecured portfolio is easing, with early signs of a recovery in the MFI cycle (turnaround expected from Q2 FY26) and the CGFMU cover providing a buffer against future MFI-related credit costs.

Moreover, the scaling down of the credit card portfolio has further reduced asset quality risks. We reiterate our Buy rating on AU SFB with a revised target price of Rs 772 (earlier Rs 748)

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.