- AU Small Finance Bank reported 16% rise in net interest income for Q3 FY26
- Net profit surged 26% to Rs 668 crore, meeting street estimates
- Jefferies raised target price to Rs 1,220, citing margin and asset quality gains
Shares of AU Small Finance Bank Ltd. will be in focus heading into trade on Wednesday after the company reported its third-quarter earnings for the financial year ending March 2026. In the wake of their Q3 earnings, a host of brokerages have retained a bullish outlook on the counter, with firms like Morgan Stanley and Jefferies even hiking their target prices.
AU Small Finance Bank reported strong growth in net profit and net interest income in the third quarter of the current financial year, meeting street expectations. The NII rose 16% to Rs 2,341 crore in the October-December period, compared to Rs 2,023 crore in the corresponding quarter last year, according to an exchange filing on Tuesday. Analysts' consensus estimates compiled by Bloomberg projected Rs 2,309 crore.
The net interest margin came higher than the estimate, but lower than last year. Profit after tax surged over 26% to Rs 668 crore, meeting the estimate of Rs 646 crore, while operating profit was steady.
In light of AU Small Finance Bank's Q3 earnings, brokerages retain their bullish outlook on the counter, with Jefferies and Morgan Stanley issuing price target hikes.
Brokerages On AU Small Finance Bank
Jefferies on AU SFB
Maintain Buy; Hike TP to Rs 1,220 from Rs 1,170.
Asset quality and margins surprised positively in the December quarter.
Core profits grew 29% YoY, driven by higher margins and lower credit costs.
AUM grew 19% YoY, supported by strong momentum in wheels and commercial banking.
Transition to a universal banking platform presents a near-term opportunity.
Morgan Stanley on AU SFB
Maintain Overweight; Hike TP to Rs 1,230 from Rs 1,175.
Q3 delivered a strong beat on NII and credit costs, partly offset by opex.
NIMs and asset quality surprised positively again.
Morgan Stanley maintains high conviction in EPS growth of 40% in FY27 and 23% in FY28.
Improving MFI asset quality and stronger secured loan growth underpin the outlook.
Citi on AU SFB
Maintain Buy with TP of Rs 1,150.
Earnings beat driven by NIM expansion and sharp reduction in credit costs.
MFI portfolio has normalised, while credit cards are nearing normalised levels.
Growth remains robust with positive NIM surprise of 25 bps.
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